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China has told SoftBank it will not approve the $5.4 billion acquisition of ABB’s robotics division, a shock move that threatens to upend Masayoshi Son’s physical AI ambitions.
SoftBank was recently informed that the deal would be blocked by China’s National Development and Reform Commission, the powerful state planner responsible for ensuring the security and stability of the supply chain, according to several people familiar with the matter.
China is the largest market for ABB’s robotics unit, with more than 90 percent of its robots for Chinese customers manufactured locally. The Swiss-Swedish company employs around 12,700 people in China.
Until last week, those close to SoftBank and those briefed on China’s NDRC process expected the deal to be approved although it would be subject to foreign investment security review.
ABB confirmed in a statement on Thursday that it had been informed by SoftBank that Chinese regulators had “prohibited the acquisition of the ABB Robotics business in China”.
SoftBank is now trying to determine what went wrong and whether it might try to seek approval again. The activities of the ABB division in China constituted an important attraction for the transaction, believe sources close to the Japanese group.
The NDRC review included a detailed review of ABB’s Chinese supply chains and a request to keep some manufacturing capabilities of the robotics unit in China, according to people familiar with the matter.
SoftBank agreed last October to buy ABB’s robotics division as part of the Japanese group’s progress in a sector which it believes will be linked to the rise of AI.
The deal was approved by China’s competition review in February. It was later the subject of a foreign investment security review that highlighted Beijing’s concerns over the transfer of Chinese-developed assets to a Japanese company at a time of heightened tensions with Tokyo and strategic competition with Washington.
The NDRC was concerned about moving robotic data overseas, where it could be used to train AI models, including those developed by OpenAI, in which SoftBank is a major investor, people familiar with the matter said.
ABB established a joint venture with a Chinese partner in 1992 and its operations in China, particularly its robotics business, have long enjoyed government support. The Shanghai government also helped ABB build its $150 million robotics mega-factory in Pudong, which began operating in 2022.
According to people briefed on their thinking, regulators had also considered retaining intellectual property relating to some of ABB’s robotics businesses in China, which may require parts of the business to be handed over to Chinese owners for the deal to go through.
However, those close to SoftBank say there was uncertainty in Japan over the terms formally requested in the days before the decision to block the deal.
SoftBank declined to comment.
For SoftBank, ABB’s robotics business was a key part of founder Son’s bet on physical AI and was intended to form the basis of its plans in the sector alongside AI and robotics company Roze in the United States.
Son is also in talks to buy Allied Universal, the world’s largest private security group and owner of British company G4S, with a view to using robotics and AI to increase productivity.
SoftBank shares have fallen 38 percent over the past month and 28 percent over the past year due to concerns over demand for AI and, in particular, OpenAI’s decision to push back its IPO until next year.
The delay also put pressure on SoftBank’s imminent listing of its U.S. data center developer SB Energy, which is targeting a $50 billion valuation.
The NDRC did not immediately respond to a request for comment.
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