The battle to control Arm’s business in China has been intensified by a new lawsuit aimed at maintaining the power of the unit’s controversial CEO, making SoftBank Group’s business NVIDIA. It further complicates the effort to sell to the company.
The dispute broke out almost a year ago in June after the board resolved to expel Arm China CEO Allen Wu due to a conflict of interest, but he refused to leave. Did. Chinese troops currently under Wu’s control have filed proceedings against three senior executives on the board appointed to replace him, according to people familiar with the matter. Previously unreported proceedings can take years to resolve, suggesting that Wu may remain established.
Wu fired three men, including co-CEO Phil Tang, but was subsequently reinstated by the board. According to people, in a new proceeding, ArmChina has sued the trio and demanded that the company’s assets be returned.
Arm China refused to comment on the possibility of proceedings and settlement negotiations. Three executives said they had caused “serious damages” to the company and were fired for good reason.
Tang did not return a request for comment. Arm Ltd. said it would not comment on pending legal issues and refused to provide details.
The complex battle casts doubt on the future of Arm, whose semiconductor technology is the most widely used in smartphones in the world and is increasingly deployed in computers. Softbank founder Masayoshi Son agreed last year to sell a British chip designer to Nvidia for $ 40 billion, but the road to closing the deal is becoming increasingly difficult.
China’s conflict also casts doubt on Beijing’s willingness to protect foreign investment in the world’s second-largest economy. Arm Ltd. has sold a majority stake in the Chinese unit to a consortium of investors, including Beijing-backed institutions. It has complicated the efforts of British companies to manage Arm China and Wu, which are backed by Shenzhen local governments.
Both appear to be in a stalemate. Wu, a Chinese-born U.S. citizen, has stopped signing settlement agreements worth tens of millions of dollars if he quits the company, people said. At the same time, they said two minority shareholders in Arm China, associated with Wu, filed a proceeding to overturn his June 4 dismissal.
They said Softbank started negotiations with him last year and wanted to reach some sort of solution. Instead, people said the court battle was deepening and Japanese companies were suffering from increasingly complex controversies. According to one, Softbank is currently resigning from proceeding with proceedings and has no current negotiations with Wu.
“We are experiencing a change in leadership in China. It will take time to resolve,” he said. In a recent interview with Bloomberg Television, Arm CEO Simon Cigars said. “It’s difficult, but we’re sure it will be solved.”
Softbank and Nvidia declined to comment on the dispute in China.
In a statement, Arm China said Wu’s position was “in compliance with legal registration and confirmed by Chinese law and regulation.”
Standoffs show the significant influence of relatively unknown executives on one of the industry’s most important technologies in the world’s largest Internet and semiconductor markets. Chinese companies need free access to Arm’s products to drive the country’s attempt to become self-reliant with chip technology, which relies heavily on imports. In addition to resolving the stalemate, Nvidia and SoftBank also need Beijing’s OK to close the deal, and it’s unclear if Wu’s presence will complicate it.
Wu holds Arm China in part due to local laws that make it difficult to change control of the company unless it physically controls the company’s stamps and registration documents. .. People said he refused to give them up and used the company’s funds to pay the legal costs he incurred to fight his dismissal.
Arm China said payments for statutory costs “will be in accordance with company policy and Chinese laws and regulations.”
According to those who spoke with him, his ultimate goal seems to be a large cash return and exemption from subsequent legal action. Inside Arm China, which is responsible for selling chip design and basic technology licenses domestically, Wu told local staff that he wouldn’t go anywhere. He recently gave an employee a Chinese New Year cash gift in a red envelope with his name on it.
Arm China said the money came personally from Wu to thank his colleagues, a Chinese New Year tradition.
The proceedings against the three executives will be heard in late May, according to one. Separately, Arm China’s two minority shareholders have sued a Chinese company in Shenzhen and overridden the board’s decision to expel Wu. People said the two cases are now being integrated and a hearing is scheduled for late April.
The son told investors recently in February that he plans to end the sale of Arm and “no Plan B”.
Arm wants to ensure that technology continues to spread in China, despite U.S. sanctions aimed at curbing the supply of U.S. technology to major companies like Huawei Technologies Co. I will. Arm is a UK-based company, but part of its business is regulated by the United States.
The Chinese government has not expressed its position on Arm China’s leadership struggle, but the unit has several government-backed shareholders, including the Sovereign Wealth Fund’s China Investment Corporation and the Silk Road Fund.
In an interview with Bloomberg Television, Arm CEO Segers said the 10-month standoffs haven’t had a negative impact on Arm’s business in China. He said the lack of travel for face-to-face meetings during the pandemic prolongs the process of changing China’s leadership.
“When I announced the deal in September, I said it would take about 18 months,” he said. “We are confident in that timeline.”
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