Swiss-Swedish engineering firm ABB said on Thursday that the acquisition of its robotics division by Japan’s SoftBank has been prohibited by Chinese authorities, in a major setback for SoftBank’s “physical intelligence” ambitions.

The acquisition, announced last October, had cleared a competition review in China but was subject to an additional foreign investment security review by China’s state planner, the National Development and Reform Commission, due to ABB’s large robotics business in the country.

China is the biggest market for ABB’s robotics division, with more than 90 percent of robots for Chinese customers being manufactured within the country. ABB employs about 12,700 people in China.

Intellectual property

The NDRC review had been concerned with robotics data being transferred out of the country, where it could be used to train AI models, including those developed by OpenAI, in which SoftBank is a major investor, the reported.

The review had at one stage reportedly considered keeping intellectual property relating to some of ABB’s robotics businesses within China, which could have required parts of the business to be sold off to Chinese owners.

ABB set up a joint venture with a Chinese partner in 1992 and its operations in the country have received significant government support over the years, including support from the Shanghai government to build ABB’s $150 million (£111.5m) robotics factory in Pudong, which began operating in 2022.

Robotics hub

The company’s website lists ABB Engineering (Shanghai) as the home of its global robotics headquarters and as a major research and development production base for ABB Group.

The NDRC earlier this year forced Facebook parent Meta to unwind its $2bn acquisition of China-founded AI start-up Manus.