Arm China’s CEO is refusing to step down after being ousted by Arm last week.
The SoftBank-owned company tried to replace the CEO of its joint venture in China, Allen Wu, last week after attempting to wrestle control of the unit for the last two years. It sold a majority stake in the company in 2018 before a dispute began in 2020 over its management. Arm attempted to replace Wu as it believed he was putting the progress of Arm China at risk.
Wu is now refusing to relinquish his role despite being fired last week, Arm China said today in a Weibo post, as reported by Reuters. The company said that Wu has refused to comply with the board’s decision, deliberately challenged the bottom line of the law, and refused to hand over his management duties.
It added that Wu and his supporters have been using social media accounts and platforms to voice opposition to the board’s decision. In response, Arm China said it would make its official Weibo account its main communications channel with immediate effect.
It also said it might pursue legal action against those who use the company’s other online channels to spread false information, including via WeChat and other websites associated with the company.
When asked about Wu refusing to step down, a spokesperson from Arm told IT Pro that its statement from last week still stands.
“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,” said the spokesperson.
Earlier this week, a letter emerged which appeared to be from Arm China’s staff on its official website protesting the removal of Wu. The letter accuses SoftBank of seeking to control Arm China despite its minority shareholding, as translated by The Register.
By doing this, it says it ignores Arm China’s purpose, which is to provide a major commercial distribution channel for Arm to licence its IP to Chinese licensees. The letter describes the takeover as unreasonable, harmful to investors, and illegal, despite the relevant Chinese authorities signing off on the changes at the company. The document appears to be signed by hundreds of staff members.
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This could complicate Arm’s stock market listing, as the company has not received a financial audit from its Chinese joint venture for the past two years, a process needed for its planned IPO.
Arm owned a 47% stake in Arm China, with the remaining stake controlled by various Chinese entities, including Hopu Investment which has a 36% stake, according to Tom’s Hardware. Arm tried to transfer its stake in Arm China to an independent entity last month in an attempt to help it IPO without requiring Arm China to be audited. By transferring its stake, it could change the status of Arm China from a joint venture to an investment.
In order to IPO, Arm needs to complete its financial review between June and September, an impossible task as Arm China refuses to disclose its financial results. However, it’s unclear whether the stake transfer was approved by Arm China CEO Wu, meaning that Arm China could still be an Arm joint venture.
Softbank pulled the plug on the sale of Arm to Nvidia in February and has expressed an intent to list the company on a stock exchange by March 2023.
