It uses equipment exclusively from Western manufacturers, such as the digital flight control system being developed by a collaboration between Teleavio, Marconi Italiana and BAE Systems. The M-346 is a highly modified version of the aircraft that was being developed under the joint venture. Yakovlev would be able to sell the Yak-130 to countries such as those in the Commonwealth of Independent States, India, Slovakia and Algeria, while Aermacchi would be able to sell the M-346 to NATO countries, among others. In mid-2000, it was announced that differences in priorities between the two firms, and a lack of financial backing from the programme's Russian participants, had brought about an end to the partnership and that each firm would pursue development of the aircraft independently Yakovlev received US$77 million for technical documents of the aircraft. By July 2000, Aermacchi held a 50% stake in the development programme, and Yakovlev and Sokol had a 25% share each.
In October 1998, it was reported that the venture was increasingly becoming an Italian-led effort due to a lack of financial support on the part of Russia. In February 1996, Russia provided initial funding for the Yak/AEM-130 and pledged to purchase up to 200 aircraft for the Russian Air Force. By this point, the aircraft was being marketed as the Yak/AEM-130. The resulting aircraft first flew in 1996 and was brought to Italy the following year to replace the aging MB-339. Aermacchi also gained the right to modify and market the aircraft for the Western market. In 1992, Aermacchi signed a cooperation agreement with Yakovlev to provide financial and technical support for the new trainer that the firm had been developing since 1991 for the Russian Air Force in competition with the Mikoyan MiG-AT.
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