Masayoshi Seun
Photographer: Kiyoshi Ota / Bloomberg
Photographer: Kiyoshi Ota / Bloomberg
The struggle for control of Arm Ltd. China’s venture escalates with new lawsuits aimed at keeping the unit’s controversial CEO in power, further complicating matters SoftBank Group Corp’s attempts to sell the business Nvidia Corp.
The dispute erupted in June almost a year ago after the council voted to oust Allen Wu, CEO of Arm China, due to conflicts of interest, but he refused to leave. According to people familiar with the matter, the Chinese unit, which remains under Wu’s control, has filed a lawsuit against three senior executives who have appointed the council to replace him. It may take years to resolve the previously unreported packages, indicating that Wu may remain entrenched.
Wu fired the three men, including co-CEO Phil Tang, but they were subsequently reinstated by the board. In the new lawsuits, Arm China is suing the trio and demanding, according to the people, that they return property from the company.
Poor China declined to comment on ongoing lawsuits or possible settlement talks. It is said that the three managers caused the company ‘material damage’ and that they were terminated for legal reasons.
Tang did not return requests for comment. Arm Ltd. declined to elaborate and said he would not comment on pending legal matters.
The complex dispute has cast doubt on the future of Arm, whose semiconductor technology is the most widely used smartphone worldwide and is increasingly used in computers. SoftBank founder Masayoshi Son has agreed to sell the British chip designer to Nvidia for $ 40 billion last year, but the road to completing the deal is becoming increasingly difficult.
The China dispute also raises questions about Beijing’s willingness to protect foreign investment in the world’s second largest economy. Arm Ltd. sold a majority stake in the China unit to a consortium of investors, including Beijing-backed institutions. This has hampered the British firm’s efforts to manage Arm China and Wu, which has support from local authorities in Shenzhen.
Both sides seem to be dying. Wu, a Chinese-born Chinese citizen, withdrew from signing ten-million-dollar settlement agreements if he were to leave the company, the people said, asking not to be identified and talking about lawsuits. At the same time, two minority shareholders in Arm China, which is linked to Wu, have filed lawsuits to block his dismissal on June 4.
SoftBank negotiated with him last year and hoped to reach a solution, they said. Instead, court battles are deepening and the Japanese company has soured over the increasingly complex dispute, the people said. According to one of the people, SoftBank has now been thanked for initiating the lawsuit and there are no current negotiations with Wu.
‘We are going through a leadership change in China; it takes time to resolve, ”said Simon Ltd., CEO of Arm Ltd., recently interviewed by Bloomberg Television. “It is difficult. But we are confident that it will be resolved.”
SoftBank and Nvidia declined to comment on the dispute in China.
Poor China said in a statement that Wu’s position is “in line with legal registration and is confirmed by China’s laws and regulations.”
Read more: Arm focuses on Intel Chips in Biggest Tech Revision in Decade
The absence gives rise to a relatively unknown executive influence on one of the most important pieces of technology in the industry in the world’s largest internet and semiconductor market. Chinese companies need unrestricted access to Arm’s products to continue the country’s efforts to make themselves more independent of chip technology, an area where it is largely dependent on imports. In addition to resolving the stalemate, Nvidia and SoftBank also need the signing of Beijing to conclude their deal, and it is unclear whether Wu’s presence would complicate that.
Wu’s hold on Arm China is due in part to local laws that make it difficult to change the control of a company unless you physically control the company stamp and registration documents. He refused to give it up and used company funds to pay legal costs he incurred in his attempt to fight his dismissal.
Poor China said the payment of legal fees is in accordance with company policy as well as the laws and regulations of China. “
According to people who spoke to him, his ultimate goal seems to be a large cash payout and an immunity against subsequent legal action. In Arm China, which is responsible for selling licenses for its disk design and fundamental technology in the country, Wu told local staff he was not going anywhere. He recently gave Chinese Chinese New Year cash gifts in a red envelope with his surname on it.
Poor China said that Wu’s money came personally to show his appreciation to colleagues, a tradition during the Chinese New Year in the country.
Trial in the case against the three drivers is expected to take place at the end of May, one of the people said. Separately, two minority shareholders in Arm China sued the Chinese entity in Shenzhen to annul the board’s decision to oust Wu. The two cases are now being merged and hearings are scheduled for the end of April, the people said.
Sun told investors as recently as in February that he would close the Arm sale and “I have no plan B.”
Poor, in turn, is trying to make sure its technology stays in China on an ongoing basis, despite US sanctions intended to curb the supply of US technology to large companies such as Huawei Technologies Co. While Arm is a UK company, part of its operations in the US is placing its products under control.
The Chinese government has not stated its position on the Poor China leadership struggle, but the unit has several government-backed shareholders, including sovereign wealth fund. China Investment Corp and the Silk Road Fund.
In his interview with Bloomberg Television, CEO of Seg Ltd., Seg Ltd., said that the postponement of ten months of Arm’s business in China did not cause harm. The lack of travel for face-to-face meetings during the pandemic has prolonged the process of changing leadership in China, he said.
“When we announced the agreement in September, we said it would take about 18 months,” he said. “We remain confident in the timeline.”
– With the help of Emily Chang