China Blocks SoftBank's $5.4 Billion ABB Robotics Deal After Security Review

A security decision disrupts a major robotics takeover

China has prohibited SoftBank's acquisition of ABB Robotics' business in China, putting a $5.375 billion global takeover at risk even after the deal cleared the country's competition review in February. China accounts for approximately 30% of the robotics division's business, making the decision a major obstacle to Japanese investor Masayoshi Son's plans to combine artificial intelligence with industrial machines.

ABB said on Thursday that SoftBank had informed it of the prohibition by China's Office of the Working Mechanism for Foreign Investment Security Review. The National Development and Reform Commission, China's powerful economic planning body, was identified as the institution behind the security review and rejection.

The proposed acquisition, announced on October 8, 2025, would give SoftBank an established producer of robotic arms and other factory equipment, with approximately 7,000 employees worldwide. ABB Robotics generated about $2.3 billion in revenue in 2024, equivalent to roughly 7% of ABB Group sales.

ABB and SoftBank said they remained engaged and were working constructively on the transaction. Neither company announced that the global agreement had been terminated. Whether a revised proposal can win approval, and whether the original completion target of the middle to later part of 2026 can survive, remains unresolved.

The central concerns extend beyond who owns the machines. Chinese officials examined whether manufacturing capabilities, intellectual property and information generated by robots could move outside China. For factory customers and employees, the immediate issue is the future ownership of a business deeply embedded in Chinese production and supply chains.

Why competition approval was not enough

China's competition review cleared the transaction in February. That process examines questions such as whether a merger would reduce competition or give a company excessive market power. The foreign investment security review examined a different set of concerns, including control over strategically important industrial capabilities.

The security review scrutinised ABB's Chinese supply chains and reportedly sought commitments to retain some robotics manufacturing capabilities in China. Regulators also considered keeping certain intellectual property or business operations under Chinese ownership, potentially through the separation of parts of the business.

People familiar with the discussions described uncertainty within SoftBank about which conditions were being formally requested in the days before the rejection. SoftBank had expected approval until shortly before learning of the block and was considering whether to seek approval again.

The distinction between the two reviews explains how a deal can pass one regulatory test and still be stopped. Approval on competition grounds leaves a separate decision about national security, industrial capacity and sensitive information. ABB identified the foreign investment security review office as the authority that prohibited the acquisition in China.

Factory data sits at the centre of the dispute

Chinese regulators were reportedly concerned that data from ABB's robotics operations could be transferred overseas and used to train advanced AI models, including models developed by OpenAI. SoftBank is a major investor in the American AI company.

Industrial robots generate information as they work: how machines move, how production tasks are completed and how equipment responds to changing conditions. Such information can help developers teach AI systems to perform physical tasks rather than simply generate text or images.

For China, the review therefore involved both physical assets and knowledge produced inside factories. A manufacturing plant contains machinery, engineers and supplier relationships, while its operating data can help improve the next generation of machines. The reported demands to retain manufacturing and intellectual property addressed those connected assets.

China is a core part of ABB Robotics

China is ABB Robotics' largest market, accounting for approximately 30% of its business. That share makes the Chinese operation much more than a small subsidiary that could be easily set aside while the rest of the acquisition proceeds.

ABB's wider group counts China as its second largest market. More than 90% of the group's sales in China come from locally made products and services. Within robotics, more than 90% of the robots supplied to Chinese customers are manufactured locally, according to figures describing the division's production footprint.

Shanghai is central to that network. ABB opened its $150 million robotics factory in the city's Pudong district in 2022, with support from the Shanghai government. The company also maintains robotics development capabilities there, bringing production and engineering together.

ABB established a joint venture with a Chinese partner in 1992. Its business has since developed alongside local suppliers and government support. Those longstanding ties help explain why the review focused on what would remain in China after a change of ownership.

The scale is also important for SoftBank. Buying ABB Robotics would bring access to an existing industrial customer base and manufacturing network. Losing control of a market responsible for about three out of every ten dollars of the division's business would substantially change what SoftBank receives under the proposed transaction.

What SoftBank wanted to build

Masayoshi Son, SoftBank's chairman and chief executive, has made robotics a central part of his AI investment strategy. His ambition is to connect increasingly capable software with machines that can act in the physical world, a field commonly called physical AI.

Son described that direction when the ABB agreement was announced:

SoftBank's next frontier is physical AI.

ABB Robotics would supply industrial engineering experience, factories and relationships with customers in sectors such as automotive manufacturing and electronics. SoftBank planned to bring that platform together with its investments in companies including AutoStore, Agile Robots and Skild AI.

The proposed transaction would therefore connect two kinds of expertise. ABB makes machines that must repeatedly perform precise tasks in demanding factory environments. SoftBank is investing in AI systems intended to make machines more adaptable. Combining them could help robots handle a wider variety of tasks without requiring every movement to be programmed separately.

Shanghai shows what physical AI means in practice

Han Chen, president of ABB Robotics in China, described practical applications during an industrial fair on October 12, 2026. He said the acquisition process was progressing normally and remained within its planned completion window. He also said ABB's strategy and commitment to China would continue regardless of ownership.

Han pointed to a controller production line at ABB's Shanghai factory that can make more than 200 product configurations. Switching between configurations traditionally required substantial changeover time and stocks of inventory. He said a flexible production line using physical AI allowed the factory to respond to different orders and produce according to demand.

The example explains the attraction of the technology for manufacturers. A conventional automated line works well when it repeats a stable task. A more adaptable system aims to cope with frequent changes in product type, specifications or configuration, reducing the amount of adjustment needed between orders.

ABB also demonstrated a GoFa collaborative robot making pour over coffee. The robot learned elements of the task through imitation, including the kettle's movement, the initial wetting of the coffee and the timing of water pouring. The demonstration combined vision, training and autonomous movement planning technologies.

Han said about 90% of ABB robots sold in China were manufactured at the Shanghai factory and that localisation would deepen. He cited products developed around Chinese production and supply chains, including the IRB 6720 Lite+ industrial robot and a PoWa collaborative robot model capable of carrying seven kilograms.

ABB had already replaced a stock market plan

ABB originally intended to separate its robotics business into a company with its own stock market listing. The SoftBank agreement replaced that plan. Under the proposed structure, ABB would transfer the division into a new holding company and SoftBank would acquire all its shares.

Peter Voser, ABB's chairman, said the board assessed SoftBank's proposal against the planned separation. At the time of the agreement, he explained the board's decision:

It reflects the long-term strengths of the division, and the divestment will create immediate value to ABB shareholders,

ABB expected a pretax accounting gain of approximately $2.4 billion when the sale closed and net cash proceeds of around $5.3 billion after transaction costs. It separately estimated separation costs of $200 million and cash tax payments related to the transaction of $400 million to $500 million.

The robotics division recorded an operational EBITA margin of 12.1% in 2024. EBITA measures earnings before interest, taxes and amortisation, an accounting charge for certain assets. The margin indicates the proportion of revenue remaining under that operating profit measure.

ABB planned to report Robotics as discontinued operations from the fourth quarter of 2025. Its Machine Automation division was to move into Process Automation, leaving the group more focused on its remaining electrification and automation businesses.

Sami Atiya, who led ABB's Robotics & Discrete Automation business area, was scheduled to leave ABB by the end of 2026. The announced transition included stepping down from the executive committee at the end of 2025 and advising on the robotics separation during 2026.

How the transaction reached this point

The takeover has moved through corporate restructuring, competition approval and a separate security examination. The main dated developments show why the latest decision disrupts plans that had already advanced:

• April 2025: ABB planned to separate Robotics into a company with its own stock market listing in 2026.
• October 8, 2025: ABB and SoftBank announced the $5.375 billion sale agreement, targeting completion in the middle to later part of 2026.
• Fourth quarter of 2025: ABB planned to begin reporting Robotics as discontinued operations.
• February 2026: China's competition review cleared the acquisition.
• October 12, 2026: Han Chen said the transaction remained within its planned window and that processes were progressing normally.
• Thursday's announcement: ABB confirmed that China's foreign investment security review authority had prohibited the acquisition of the robotics business in China.

The original agreement required regulatory clearances in the European Union, China and the United States. China's rejection now leaves the companies considering how to proceed with a transaction built around acquiring the whole robotics division.

A wider technology dispute adds pressure

China's intervention comes amid strained relations with Japan. Tensions worsened after Japanese Prime Minister Sanae Takaichi's remarks about Taiwan in November 2025, and China subsequently restricted exports of critical minerals to Japan. The ABB review took place within that difficult political setting.

Beijing has also intervened in another major AI transaction. In April 2026, China ordered Meta to unwind its acquisition of AI startup Manus, a deal valued at more than $2 billion. Both cases involve Chinese scrutiny of foreign ownership in businesses connected to advanced technology.

Investors reacted negatively to the ABB decision. SoftBank shares closed 6.8% lower in Tokyo on Thursday, while ABB shares fell 1.1% in morning trading. SoftBank's decline came as the company was committing substantial resources to AI and trying to extend that strategy into industrial robotics.

ABB and SoftBank's next task is to determine whether a structure acceptable to Chinese regulators can preserve the commercial purpose of the acquisition. Manufacturing, intellectual property and access to operating data are central to the value of the business. Any revised arrangement would need to address those assets while keeping a workable global robotics operation.

Key Points

• China prohibited SoftBank's acquisition of ABB Robotics' Chinese business following a foreign investment security review.
• The $5.375 billion global transaction had already cleared China's competition review in February.
• Regulatory concerns reportedly included overseas transfers of robotics data, AI training and retention of manufacturing capabilities.
• China accounts for approximately 30% of ABB Robotics' business, and most robots sold there are manufactured locally.
• ABB Robotics employs about 7,000 people worldwide and generated approximately $2.3 billion in revenue in 2024.
• ABB and SoftBank continue working on the transaction, with approval of any revised proposal and the completion timetable unresolved.