UK chip giant Arm’s battle over ousting of China CEO escalates, complicating SoftBank sale
- Arm China sues three employees who had been fired and subsequently reinstated
- Legal disputes involving Arm China CEO Allen Wu, a Chinese-born US citizen, could drag on for years
The battle for control of Arm's China business is escalating with new lawsuits aimed at keeping the unit’s controversial chief executive in power, further complicating SoftBank Group Corp’s efforts to sell the business to Nvidia Corp.
The dispute erupted almost a year ago in June after the board voted to oust Arm China chief executive officer Allen Wu for conflicts of interest, but he refused to leave. Now the Chinese unit, which remains under Wu’s control, has filed lawsuits against three senior executives the board designated to replace him, according to people familiar with the matter. The previously unreported suits could take years to resolve, suggesting 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, demanding they return company property, according to the people.
Arm China declined to comment on any ongoing legal cases or possible settlement talks. It did say the three executives had caused “material damages” to the company and they had been terminated for legitimate reasons.
Tang did not return requests for comment. British semiconductor design company Arm declined to elaborate, saying it will not comment on pending legal matters.
The complex tussle has thrown into question the future of Arm, whose semiconductor technology is the world’s most widely used for smartphones and is increasingly deployed in computers. SoftBank founder Masayoshi Son agreed to sell the British firm to Nvidia for US$40 billion last year, but the path for completing that transaction is growing increasingly difficult.
The China dispute also raises questions about Beijing’s willingness to protect foreign investment in the world’s second-largest economy. Arm sold a majority stake in the China unit to a consortium of investors, including Beijing-backed institutions. That has complicated the British firm’s efforts to manage Arm China and Wu, who has support from local authorities in Shenzhen.
Both sides appear to be at a stalemate. Wu, a Chinese-born US citizen, pulled back from signing settlement agreements worth tens of millions of dollars if he would leave the company, the people said, asking not to be identified talking about legal matters. At the same time, two minority shareholders in Arm China linked to Wu have filed lawsuits to overturn his June 4 dismissal, they said.