v3.26.1
EQUITY METHOD INVESTMENT
3 Months Ended
Mar. 31, 2026
Commitments and Contingencies Disclosure [Abstract]  
EQUITY METHOD INVESTMENT EQUITY METHOD INVESTMENT
On February 21, 2022, Arteris IP (Hong Kong) Ltd. (AHK), a wholly-owned subsidiary of the Company, entered into a Share Purchase and Shareholders Agreement (the SPA) with certain investors and Ningbo Transchip Information Consulting Partnership (Limited Partnership) (Management Co) pursuant to which, the Company, certain investors and Management Co subscribed to the registered capital of Transchip Technology (Nanjing) Co., Ltd. (Transchip).
In September 2025, Transchip entered into a convertible bond investment agreement along with certain investors, under which Transchip received approximately $5.6 million as a loan in October 2025. Pursuant to the convertible bond investment agreement, the loan will be converted into Transchip’s equity upon the fulfillment of certain conditions, which will result in a dilution of the Company’s ownership in Transchip. The Company did not provide funding under this agreement.
In February 2026, Transchip granted stock awards to certain of its employees. After Transchip’s grant of the stock awards, the Company’s ownership of Transchip’s registered capital based on issued and outstanding shares decreased from 42.7% as of December 31, 2025 to 36.9% as of March 31, 2026. The Company’s ownership interest of Transchip’s registered capital was 35.0% on a fully diluted basis as of March 31, 2026.
The Company records its proportionate share of loss in its equity method investment in Transchip on a one-quarter lag and evaluates and records adjustments for material intervening events occurring during the lag period. During the three months ended March 31, 2026, Transchip recognized stock-based compensation expense associated with the February 2026 stock awards. The Company determined that its share of this expense, totaling $2.3 million, constituted a material intervening event and, accordingly, recorded its proportionate share of such expense for the three months ended March 31, 2026.
The Company’s loss from its proportionate share of its equity method investment in Transchip was $3.0 million and $0.8 million for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, there was no carrying value associated with the equity method investment in Transchip.