June 10, 2020 / 3:39 AM / a month ago

SoftBank's Arm at loggerheads with Chinese venture over CEO

SHANGHAI/SAN FRANCISCO (Reuters) - SoftBank Group Corp-owned Arm Ltd and its Chinese joint venture on Wednesday publicly disagreed over whether the unit’s chief executive officer had been fired, disclosing an internal spat at one of the global chip industry’s major suppliers.

Arm Ltd had earlier in the day said that it had replaced Allen Wu, who had served as the venture’s chairman and CEO, with interim co-CEOs Ken Phua and Phil Tang.

Arm China, a Shanghai-based joint venture between British chip designer Arm Ltd and Chinese private equity firm Hopu Investments, later said that Wu continued to be its CEO and that its operations were carrying on as normal in a statement published on its official WeChat account.

Arm Ltd and Hopu disputed that, saying that Wu was removed on June 4 after complaints from a whistleblower and from current and former employees prompted an investigation.

Wu did not immediately respond to messages sent to his LinkedIn account and email address. An employee who gave his surname as Chen and said he worked in the public relations department at Arm China’s Shanghai office said the WeChat post was valid but declined to answer further questions.

“Mr. Wu, a US citizen, was putting at risk the progress of Arm China and the interests of the company’s shareholders and stakeholders,” Arm and Hopu said in a statement.

“Evidence received from multiple sources found serious irregularities, including failing to disclose conflicts of interest and violations of the employee handbook.”.

Arm Ltd added that it was working to transition to new local leadership.

Arm China, which generates revenue by licensing chip architecture to Chinese companies, was established in 2018 when SoftBank sold a 51% stake in Arm Ltd’s Chinese subsidiary, Arm Technology (China) Co Ltd, to a group of Chinese investors. SoftBank had acquired Arm in 2016 for $32 billion.

The spat comes at a tricky time for Arm as it tries to navigate rising tensions between the United States and China over technology. Last month, the Department of Commerce placed additional restrictions on smartphone maker Huawei Technologies Co Ltd [HWT.UL] that would prevent certain U.S. companies from supplying to it.

Last October, Arm Ltd said it would continue to supply its designs to Huawei after ruling they did not breach U.S. rules.

Reporting by Josh Horwitz in Shanghai and Stephen Nellis in San Francisco; Additional Reporting by Shanghai Newsroom and Brenda Goh Editing by Tom Hogue, Stephen Coates and Emelia Sithole-Matarise

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