Several of its critical former employees from its Chinese venture have founded a new chip design company, Borui Jingxin, with the support of the local government. 

This move comes after Arm raised $5 billion in an initial public offering.

Also Read: Apple's iPhone to Bear Brunt of US-China Tensions as the Asia Giant Looks to Extend Ban to State Agencies

The fledgling company, backed by the Shenzhen government, seeks to raise funds and hire engineers and aims to become a significant licensee of Arm, focusing on chip designs for servers.

Despite its challenges, Arm remains a significant player in a market that accounts for a quarter of its revenue. 

However, its relationship with its Chinese venture, Arm Technology (China) Co, is intricate, involving influential local and government-backed entities. Arm China downsized its R&D team earlier this year, with many employees joining Borui.

Arm's major clients include Apple, which depends on China for nearly 20% of its annual revenue. Leading chip manufacturers like Qualcomm Inc (NASDAQ: QCOM) and MediaTek Inc rely heavily on Arm's product designs.

Price Action: ARM shares traded lower by 0.88% at $54.20 premarket on the last check Thursday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.