(JW Insights) Feb 17 -- Chip technology firm Arm China suffered a 90% drop in profit last year despite revenue rising more than 30% during the first year management appointed by SoftBank took over, Reuters reported on February 16 after reviewing a financial document.

ARM China is the exclusive distributor of Arm chip technology in China and develops and sells its own chip designs based on Arm's IP. It accounts for 20%-25% of Arm Ltd's global revenue, according to two sources familiar with the situation.

One of the sources said the drop in Arm China's profit would not have a financial impact on Arm Ltd, whose royalty and licensing fee payments come before profit is calculated. In 2021, the China business paid Arm about $500 million, the two sources said. It is not clear how much Arm Ltd made from China last year.

“The Arm Ltd IP business part of Arm China is performing very well and we are positioned for continued growth going forward. The new management team has quickly restored confidence with our China ecosystem, and we are pleased to have the previous management issues well behind us as we expand Arm technology into the China market,” said Phil Hughes, Arm's vice president of external communications, in a prepared statement.

Arm China's net profit plunged to $3.2 million last year from $79.2 million in 2021, while revenue grew to nearly $890 million last year from $665 million the year before, according to the company's 2022 unaudited earnings statement, seen by Reuters and confirmed by another independent source.

The company, set up in 2018 as a joint venture of British chip technology firm Arm Ltd, laid off nearly 100 employees last week, most of them engineers, said Reuters.

(Yuan XY)