Unity is contemplating the sale of its business in China, aiming for a valuation exceeding $1 billion.

      Unity Software, a US-based company specializing in real-time 3D technology, is considering the sale of its operations in China, aiming for a valuation exceeding $1 billion, according to sources familiar with the situation cited by Bloomberg. The company has engaged advisers to seek out potential buyers, but the discussions are still in the early stages, and no agreement has been finalized.

      Since entering the Chinese market in 2012, Unity has established a strong foothold in the game development sector. Many popular games, including Tencent’s Honor of Kings, have been created using Unity’s engine. Its operations in China are responsible for generating hundreds of millions of dollars in annual revenue. Increasing pressures in recent years may have led the company to reassess its global strategy.

      Unity Software's stock has plummeted by over 60% since the beginning of 2026, even though revenue for Q4 2025 increased to $503.1 million, as reported by Sina Finance. The company's management remains cautious regarding growth and market conditions.

      Unity China, its joint venture in China, has attracted investments from various entities, including Alibaba Group, China Mobile, and ByteDance. Some investors possess redemption rights if certain conditions are not satisfied, underscoring ongoing uncertainty regarding the venture’s future. Analysts suggest that a potential divestiture could aid Unity in easing capital pressures and alleviating liquidity risks.

      Last year, Google’s DeepMind introduced its AI world model, Genie 3, which has caused a stir in the market. This technology has the ability to instantly create interactive 3D virtual environments from a single image or text description, posing a disruptive threat to conventional game engine models.

      Market participants are worried that these AI innovations could considerably lower the barriers to game development, potentially undermining Unity’s core competitive advantage. Consequently, Unity’s shares, along with those of competitors such as Roblox and Ubisoft, have declined, affecting the wider video game industry.

      Unity had considered spinning off its China business as early as 2022, aiming to provide local teams with greater autonomy and to branch out into non-gaming sectors like smart cities and industrial design. That same year, it formed a joint venture in China with strategic partners.

      Should the proposed sale proceed, it could signify Unity’s complete withdrawal from direct operations in China. The company has yet to make any public statements regarding the sale.

      Jessie Wu is a tech reporter based in Shanghai, covering consumer electronics, semiconductors, and the gaming industry for TechNode. You can connect with her via email: jessie.wu@technode.com.