ARM, the IP licensor owned by Softbank Group, has been in dispute with Wu for several months and tried to sack him over allegedly inappropriate venture capital dealings and conflict of interest (see Report: VC dealings at heart of ARM’s China trouble).
Both parties have said they want a quick resolution to the dispute and both have appealed to the Chinese government to intervene.
Meanwhile Wu remains in control of the minority-owned subsidiary and has escalated the situation by hiring staff to exclude ARM Ltd. executives and members of the board of directors from ARM China premises. The escalation of the situation at ARM China is likely to prevent Softbank from any attempt to sell ARM (see Opinion: ARM’s refocus is good; suits a sale).
Wu is, “propagating false information and creating a culture of fear and confusion among ARM China employees,” according to reports quoting an ARM Ltd. statement. “Allen’s focus on his own self-preservation has also put China semiconductor innovation at risk as he has attempted to block the critical communication and support our China partners require from ARM for ongoing and future chip designs,” it was quoted saying.
The reports add that Wu has used social media to accuse ARM Ltd. of going direct to customers and trying to get them to cancel contracts with ARM China even though ARM China has the exclusive right to sell ARM’s products in China.
If, when and how the Chinese government intervenes will be a test of China’s respect for foreign companies’ intellectual property. But it will also inevitably be seen in the light of US-China political tensions.
Next: Minority is lack of control
Many of ARM’s problems stem from the decision taken in 2018 to give up control of its subsidiary by allowing 51 percent to be taken by a consortium that includes China Investment Corp., the Silk Road Fund and Singaporean state investment firm Temasek Holdings Pte.
Under Chinese law possession of the company seal and letters of registration is fundamental to ownership and, according to reports, these are things Wu is refusing to handover. Legal action to compel him to surrender these instruments could take a considerable time and it has been speculated that Wu is stalling in an attempt to obtain beneficial terms for compliance.
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