Renewed bid to oust Arm China head

The two-year battle for control of Arm China is heating up again as SoftBank Group Corporation, owner of Britain-based jointventure partner Arm, mounts a renewed effort to oust the defiant head of the Chinese operation so it can proceed with a public listing.

The dispute over who controls Arm China started in June 2020 when Arm attempted to oust Allen Wu, chief executive and chairman of the China venture, for alleged conflict of interest.

Wu told the Post on Wednesday that SoftBank’s efforts to take back control of Arm China posed risks for China’s supply chain security and technology self-sufficiency, and could jeopardise the interests of other shareholders. Wu controls a 16 per cent stake in the venture.

“SoftBank has already given up its absolute control of Arm China for money,” Wu said, referring to its sale of a 51 per cent stake in the venture to a Chinese consortium for US$775.2 million in 2018. “Is it right for SoftBank to control Arm China? I don’t think it’s right.”

Wu, who has headed the China venture since its founding in 2018, filed lawsuits in Shenzhen challenging Arm China’s 7-1 boardroom vote to fire him two years ago.

The fight for Arm China intensified in recent weeks after SoftBank decided to proceed with an initial public offering of Arm following the collapse of Nvidia Corporation’s US$40 billion offer to buy the British tech firm.

Arm China, of which Arm owns 47.33 per cent, has become a potential stumbling block for the listing as Arm China’s auditors could not sign off on the books for the venture, according to Arm’s 2021 annual report.

The boardroom battle has become widely watched as it not only concerns the financial prospects of Arm itself, but also raises questions about China’s legal environment and its pursuit of technology self-sufficiency.

Wu’s comments came after the Financial Times reported SoftBank had selected two cochief executives to run Arm China, including Eric Chen, SoftBank’s Vision Fund managing partner, who has been leading SoftBank’s negotiations with Chinese officials.

The FT report, citing unidentified sources, also said the appointment of a new Shenzhen Communist Party chief, Meng Fanli, had “helped speed up difficult negotiations over removing Arm China chief Wu”.

Separately, Bloomberg cited unidentified sources as saying Arm would this week submit paperwork to the Chinese government to replace Wu, in the first step towards clearing the path for a successful listing.

Wu told the Post this week he had not received any notification about these developments.

An Arm spokesman said yesterday there would be “no impact to the ecosystem or the supply chain as a result of the CEO change”.

In February, Arm said the board’s decision to oust Wu was “final” and “took place in full compliance with company policies and Chinese law”.