Unity is contemplating the sale of its operations in China, with a target valuation exceeding $1 billion.

      Unity Software, a US company specializing in real-time 3D technology, is reportedly considering the sale of its business in China, aiming for a valuation exceeding $1 billion, according to sources who spoke to Bloomberg. The firm has engaged advisers to seek potential buyers, but negotiations are still in the initial phases and no agreements have been finalized.

      Since its entry into the Chinese market in 2012, Unity has established a leading position in the country’s game development landscape. Notable games like Tencent’s Honor of Kings have been created using Unity’s technology. Its operations in China generate annual revenues in the hundreds of millions. The increasing pressures in recent years may have led the company to rethink its global strategy.

      Unity's shares have plunged over 60% since the beginning of 2026, despite reporting a sequential revenue increase to $503.1 million in Q4 2025, as noted by Sina Finance. The company’s leadership is currently cautious regarding growth and market conditions.

      Unity’s joint venture in China has received investments from notable companies including Alibaba Group, China Mobile, and ByteDance. Some investors possess share redemption rights under specific conditions, reflecting the ongoing uncertainty surrounding the venture’s future. Analysts suggest that a possible divestment could assist Unity in alleviating capital pressures and alleviate looming liquidity concerns.

      Last year, Google’s DeepMind unveiled its AI world model, Genie 3, which has stirred the market. This technology can rapidly create interactive 3D virtual environments from a single image or text description and is perceived as a significant challenge to traditional game engine models.

      Market players are worried that these AI tools might notably lower the barriers to game development, potentially undermining Unity’s primary competitive advantage. Consequently, shares of Unity, as well as those of competitors like Roblox and Ubisoft, have dropped, contributing to a decline in the overall video game sector.

      Unity had intended as early as 2022 to divest its China operations, aiming to empower local teams with more independence and to branch into non-gaming sectors such as smart cities and industrial design. That same year, the company set up a joint venture in China with strategic partners.

      Should the potential sale proceed, it could signify Unity’s total withdrawal from direct operations in China. The company has not yet commented on the potential sale.

      Jessie Wu is a tech journalist based in Shanghai, reporting on consumer electronics, semiconductors, and the gaming industry for TechNode. You can reach her via email at jessie.wu@technode.com.