Ex-chief of chip giant Arm’s China unit fights for control

BRITAIN’S biggest microchip company Arm is facing a legal war with a rogue executive for control of its Chinese division after he was ousted this week.

Allen Wu, who was removed as chief executive of the Arm China joint venture on Thursday, accused the Cambridge-based company and its owner Softbank of “barbarian acts of capital” as he launched a legal challenge.

Mr Wu released a letter he claimed was signed by 430 employees of Arm China accusing Softbank of trying to “seize control” of the venture and of “illegal and unreasonable” behaviour.

He said he would challenge filings in the city of Shenzhen removing him as chief executive of the joint venture.

The prospect of a new legal challenge threatens to cast a cloud over Softbank’s plans to float Arm in the next year.

The former FTSE 100 company, which has more than 3,500 staff in Britain, is to be listed in New York after a deal to sell the company to Nvidia fell through earlier this year.

Arm said yesterday it had appointed Liu Renchen, a university professor in Shenzhen and Eric Chen, a Softbank executive, as Arm China’s co-chief executives, and that its board had unanimously agreed to the changes. “Arm China has resolved its longstanding corporate governance issue as its board of directors has voted unanimously to appoint Liu Renchen and Eric Chen as Arm China’s co-ceos,” it said.

However, Mr Wu published an open letter on the Chinese social network Wechat saying that “all the management and employees of Arm China are totally opposed”.

“According to the legal opinions of external lawyers, there are major legal defects in the industrial and commercial change registration procedure … We firmly support the company to take legal measures according to law to safeguard its legitimate rights and interests.

“We are firmly opposed to all acts of breaking promises and challenging Chinese laws and regulations, and to the ‘barbarian’ acts of capital overriding the interests of shareholders, companies and even industries and national interests.” Mr Wu indicated he may seek political support for his bid to win back control over Arm China, describing Softbank as “a large Western capital consortium [that] has repeatedly violated its commitment to the Chinese market”.