SoftBank Group Corp. has agreed to acquire the robotics division of Swiss engineering giant ABB Ltd. for $5.4 billion, in a landmark deal that marks Masayoshi Son’s most ambitious push yet to merge artificial intelligence with physical automation.

The transaction, announced on Wednesday, represents a major reshaping of both companies’ strategic priorities. For ABB, it’s a divestment from one of its most volatile but high-profile businesses. For SoftBank, it’s a major step toward establishing what Son calls “Physical AI” — the fusion of advanced machine learning models with robotics that can act, sense, and learn in the real world.

The ABB robotics acquisition gives SoftBank immediate global scale in industrial robotics, adding roughly 7,000 employees, a network of manufacturing plants across Europe, Asia, and North America, and a portfolio of over 400,000 industrial robots deployed globally. ABB’s robotics division generated $2.3 billion in revenue last year, contributing about 7% to ABB’s total sales.

While ABB’s robotics business has long been respected for its precision automation technology, it has struggled to maintain high profit margins due to intense competition from Japan’s Fanuc and Yaskawa, and Germany’s Kuka — now owned by China’s Midea Group. ABB’s decision to sell, rather than spin off the division, came after years of underperformance and challenges in integrating its robotics operations with its core electrification and automation segments.

ABB CEO Morten Wierod, who took over in 2023, told Reuters the sale offered “immediate value” and would allow ABB to focus on higher-margin and faster-growing areas.

“We always said that robotics is a market with much higher volatility,” he said. “This transaction allows us to channel resources into electrification, automation, and digitalization — markets where we see stable long-term growth.”

The deal is expected to close between mid-2026 and late 2026, pending regulatory approvals in the European Union, Japan, and the United States. ABB will receive about $5.3 billion in cash proceeds, which Wierod said would be used to expand production capacity, develop next-generation automation technologies, and fund potential acquisitions.

For SoftBank, the acquisition continues a series of aggressive moves to secure dominance in artificial intelligence and robotics infrastructure. In March, SoftBank bought chip design startup Ampere Computing for $6.5 billion, part of a broader strategy to control the hardware powering AI systems. The company has also invested heavily in automation startups such as Berkshire Grey, AutoStore, and Brain Corp, and led a $40 billion funding round in OpenAI, the maker of ChatGPT.

Son, who has previously described himself as “obsessed with AI,” said the ABB acquisition is designed to combine SoftBank’s growing AI software ecosystem with physical robotics platforms.

“SoftBank’s next frontier is physical AI,” he said. “Together with ABB Robotics, we will unite world-class technology and talent under our shared vision to fuse Artificial Super Intelligence and robotics — driving a groundbreaking evolution that will propel humanity forward.”

Industry experts see the move as part of SoftBank’s return to high-risk, high-reward investing after a period of restraint following the Vision Fund’s multibillion-dollar losses in 2020 and 2021.

ABB Exits an Uneven Market

ABB’s robotics division was once a symbol of the company’s innovation drive, supplying robots to major automakers and electronics firms. However, the division’s performance lagged in recent years due to uneven global demand and rising costs. In 2022, ABB reported that its robotics profit margin had dropped below 10%, far lower than its automation unit’s 17%.

Zürcher Kantonalbank, which had valued the division at slightly under $4 billion ahead of a planned IPO, called the $5.4 billion sale price “an unexpectedly strong outcome.” ABB’s shares rose 2% in early Zurich trading on Wednesday, while SoftBank’s stock fell slightly by 2%, as investors digested the scale of the acquisition.

The sale will also allow ABB to exit a sector facing structural headwinds. The global robotics market — valued at around $40 billion in 2024, according to Statista — is projected to grow 14% annually, driven by AI adoption and labor shortages. But the market is also becoming crowded with new entrants from China, South Korea, and the U.S., many of whom are offering cheaper, AI-powered robots.

The Rise of “Physical AI”

Son has spent years talking about “Singularity” — the moment when AI surpasses human intelligence. With the ABB acquisition, he appears to be pivoting that vision toward tangible, machine-driven productivity. The concept of “Physical AI” involves combining advanced AI systems like OpenAI’s GPT models with robotics capable of adapting to unpredictable physical environments, from warehouses and factories to homes and hospitals.

The acquisition will likely draw scrutiny from competition regulators, especially in Europe and Japan, where industrial robotics forms a critical export sector. The European Commission is expected to assess whether the deal gives SoftBank disproportionate influence over automation supply chains, particularly given its existing stake in several robotics and chip design firms.

In Japan, the government has generally supported Son’s AI vision, viewing it as aligned with Tokyo’s “Society 5.0” initiative — a national framework to fuse digital and physical innovation. Japanese industry officials believe the ABB deal could help strengthen domestic robotics and AI industries, especially as Japan faces chronic labor shortages.

The acquisition, expected to finalize within two years, will mark one of the largest-ever robotics takeovers and a defining moment for Son’s comeback as one of the tech industry’s most daring visionaries.

A new bipartisan investigation by the U.S. House Select Committee on China has revealed that gaps and inconsistencies in export control rules among the United States, Japan, and the Netherlands have allowed China to purchase nearly $40 billion worth of advanced chipmaking equipment — despite efforts by Washington and its allies to curtail Beijing’s access to cutting-edge semiconductor technology.

The report, obtained by Reuters, shows that China’s purchases of semiconductor manufacturing tools surged by 66% in 2023 from the previous year, when many of the restrictions were first introduced. Chinese firms legally acquired the equipment from top global suppliers, exploiting regulatory discrepancies among the allied nations tasked with enforcing export bans.

The findings pinpoint what lawmakers described as a critical failure in the West’s semiconductor containment strategy, with major implications for both global technology competition and national security.

The Loophole Effect

While Washington has imposed some of the world’s toughest controls on exports of advanced chipmaking tools to China, allied manufacturers, particularly in Japan and the Netherlands, have filled part of the gap left by U.S. companies barred from selling to Chinese clients.

The report notes that five of the world’s largest semiconductor equipment suppliers — Applied Materials, Lam Research, KLA, ASML, and Tokyo Electron — collectively sold $38 billion worth of tools to China last year. This accounted for nearly 39% of their global sales, highlighting how lucrative the Chinese market remains even under export restrictions.

“These are the sales that made China increasingly competitive in the manufacture of a wide range of semiconductors, with profound implications for human rights and democratic values around the world,” the committee warned in its findings.

The committee urged the United States and its allies to move beyond piecemeal bans targeting specific Chinese companies and instead adopt broader restrictions covering entire categories of chipmaking tools and components.

Washington’s National Security Push

For years, both Democratic and Republican administrations have viewed China’s rapid progress in semiconductor manufacturing as a strategic threat. Advanced chips are essential for artificial intelligence, supercomputing, and military modernization, making control over semiconductor technology a central pillar of U.S. national security policy.

The Trump administration has maintained some of the Biden-era trade policy toward China, while expanding restrictions to include not just finished chips but also the tools and software used to produce them. The latest revelations, however, suggest that these measures have not been watertight.

U.S. lawmakers say the lack of policy alignment among allies has weakened their collective leverage. Japan’s Tokyo Electron and the Netherlands’ ASML, two of the world’s most important equipment suppliers, have continued to sell to Chinese companies that American firms are prohibited from dealing with.

Mark Dougherty, president of Tokyo Electron’s U.S. unit, told Reuters that sales to China have started to decline this year as tighter export rules take hold. He acknowledged that more consistent coordination between the U.S. and Japan is still needed.

“I think it’s clear, from a U.S. perspective, there’s an outcome that is still desired that has not yet been achieved,” Dougherty said.

While Applied Materials and Lam Research did not respond to requests for comment, ASML and KLA said they could not comment until they reviewed the report in full. The committee noted that all five toolmakers cooperated with the investigation and were briefed on its findings.

Rising Concern Over Chinese Firms

The investigation also highlighted three Chinese chip firms — SwaySure Technology Co, Shenzhen Pengxinxu Technology Co, and SiEn (Qingdao) Integrated Circuits Co — as companies of “particular security concern.” U.S. officials believe these firms are part of a shadow supply chain network supporting Huawei Technologies, which remains blacklisted by Washington.

In December, the Commerce Department formally barred exports to the three companies, following warnings from committee leaders Chairman John Moolenaar (R-Mich.) and Ranking Member Raja Krishnamoorthi (D-Ill.), who accused the firms of working covertly to advance Huawei’s semiconductor capabilities.

A New Technological Battleground

Analysts warn that China’s aggressive pursuit of chipmaking self-sufficiency is reshaping the global semiconductor industry. Craig Singleton, a senior fellow at the Foundation for Defense of Democracies, said Beijing is now trying to “rewrite the entire supply chain” to reduce dependency on Western technology.

“What used to be niche tool segments are now battlegrounds,” Singleton said, adding that the competition is no longer about finished chips but about the underlying infrastructure and components that make chip fabrication possible.

The committee’s report called for tighter coordination among allies to prevent China from developing workarounds, including restrictions on components that could be repurposed for domestic tool production.

The findings come at a time when U.S.-China technological rivalry has expanded far beyond semiconductors, touching areas such as AI data centers, quantum computing, and telecommunications infrastructure. Both nations are vying for dominance in advanced technologies that are expected to define the global economy over the next decade.

While Washington’s export bans have slowed Beijing’s access to next-generation chips, the investigation shows that China’s semiconductor ecosystem remains resilient — leveraging global supply chains, state subsidies, and strategic partnerships to advance its ambitions.

The report serves as a warning for the U.S. and its allies that partial coordination is not enough in an era where chip technology has become as critical to national power as oil once was.