The two-year battle for control of Arm China is heating up again as Softbank, owner of the UK-based joint venture partner Arm Ltd, mounts a renewed effort to oust the defiant head of the Chinese operation so it can proceed with a public listing. The dispute over who controls Arm China started in June 2020 when UK-based Arm Ltd attempted to oust Allen Wu, chief executive and chairman of the China venture for alleged conflict of interest . In an interview with the South China Morning Post on Wednesday, Wu said Softbank’s efforts to take back control of Arm China pose risks for China’s supply chain security and technology self-sufficiency, and could jeopardise the interests of other shareholders. Wu controls a 16 per cent equity stake in the joint venture. “Softbank has already given up its absolute control of Arm China for money,” Wu said, referring to the fact that Softbank sold a 51 per cent stake in Arm China to a Chinese consortium for US$775.2 million in 2018. “Is it right for Softbank to control Arm China? I don’t think it’s right.” Shanghai chip maker has two-thirds of workers sleeping in factory Wu, who has headed the China joint venture since its founding in 2018, filed lawsuits in Shenzhen challenging Arm China’s 7-1 boardroom vote to fire him two years ago. The fight for Arm China intensified in recent weeks after Softbank decided to proceed with an initial public offering of Arm following the collapse of Nvidia Corp’s US$40 billion offer to buy the British tech firm. Arm China, in which Arm Ltd owns 47.33 per cent, has become a potential stumbling block for the IPO, as Arm China’s auditors could not sign off on the books for the joint venture, according to the 2021 annual report of Arm Ltd. The boardroom battle between the foreign shareholder and the Chinese management team at Arm China has become a widely-watched case, as it not only concerns the financial prospects of Arm itself, but also raises questions about China’s legal environment and the country’s pursuit of technology sufficiency. Wu’s latest comments come after The Financial Times reported that Softbank has selected two co-chief executives to run Arm China, including Eric Chen, SoftBank’s Vision Fund managing partner, who has been leading Softbank’s negotiations with Chinese officials. The FT report, citing unidentified sources, also said the appointment of a new Shenzhen Communist Party chief, Meng Fanli, has “helped speed up difficult negotiations over removing Arm China chief Wu”. Arm to lay off 15 per cent after Nvidia deal collapse Separately, Bloomberg cited unidentified sources saying that Arm Ltd will this week submit paperwork to the Chinese government to replace Wu, in the first step towards clearing the path for a successful public listing. Wu told the Post this week he has not received any notification about these developments. The Shenzhen government has not publicly commented on the issue of Arm China. Hopu Investment, which holds a 36 per cent stake in Arm China through a Hong Kong-based entity, could not be reached for comment. Softbank has not made an official statement about its plans to retake control of Arm China. SK Hynix latest semiconductor giant to eye potential acquisition of British firm Arm An Arm Ltd spokesman said on Thursday that there would be “no impact to the ecosystem or the supply chain as a result of the CEO change”. In February, Arm said the board decision to oust Wu was “final” and “took place in full compliance with company policies and Chinese law”. The lawsuits Wu filed after the board decision have held up Softbank’s attempts to change the company business registration until a court rules on the case. “The change of company business record [including the change of the company’s legal representative] has not been carried out because the lawsuits are still in process,” said Wu, who joined Arm in 2004 and was put in charge of the company’s China region sales operations in 2007. “I am fed up with the allegations that I refused to hand over the corporate seal … I am still the legal representative of Arm China,” Wu said. Wu also had the backing of Arm China’s management team. After the June 2020 board decision to oust him, a joint letter signed by executives of Arm China was published, pledging full support of Wu as head of China operations. According to Wu, Arm China’s business has been growing steadily despite the boardroom dispute, and account for most of Arm’s global growth. He estimated that Arm China’s revenue would reach US$900 million this year, up from US$700 million in 2021. Under his plan, Arm China could file a separate IPO in Shanghai or Hong Kong after 2025, Wu told the Post earlier. In his Post interview on Wednesday, Wu said Arm has not completed the transfer of its stake in Arm China to a special purpose vehicle controlled by SoftBank, a step seen necessary for the Japanese company to proceed with the IPO. Arm’s chip architecture is pervasive in smartphones, and the company is starting to gain market share in server chips due to its edge in power consumption.