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Companies
SOFTBANK-OWNED ARM OUSTS CEO OF CHINESE JOINT VENTURE
U.K. chip designer pushes to take control of Arm China ahead of planned IPO
Arm sold a majority stake in Arm China to a group of local investors in 2018.
(Photo courtesy of ARM)
WATARU SUZUKI, Nikkei staff writerApril 29, 2022 11:35 JST | China
CopyCopied
TOKYO -- SoftBank Group-owned U.K. chip designer Arm said it has replaced the
CEO of its Chinese joint venture after a two-year dispute over control of the
unit that threatened to complicate a planned initial public offering.
Arm said it has appointed Liu Renchen, vice dean at the Research Institute of
Tsinghua University in Shenzhen, and Eric Chen, managing partner at SoftBank
Vision Fund, as co-CEOs.
"Arm China is in the process of resolving its long-standing corporate governance
issue, and its Board of Directors has voted unanimously to appoint Liu Renchen
and Eric Chen as Arm China's co-CEOs," the company said in a statement. "Mr. Liu
has also been duly registered and accepted by local Shenzhen government
authorities as the company's legal representative and general manager."
Arm sold a majority stake in Arm China to a group of local investors in 2018.
The dispute over management of the company goes back to 2020, when Arm said it
replaced CEO Allen Wu after an investigation found he "was putting at risk the
progress of Arm China and the interests of the company's shareholders and
stakeholders."
But Wu has refused to leave and continued to appear at industry events as CEO,
making it difficult for the U.K. company to conduct activities such as audits.
In its latest annual report, Arm disclosed that it is in the process of
"resolving certain disputes with a member of the senior management in Arm
China," and that Arm China's financial data was unaudited.
Corporate filings on Thursday show Arm China's legal representative has now been
changed from Wu to Liu. The filings also show Wu is no longer the chairman of
the board or the general manager of Arm China. Liu is the new general manager,
and the position of chairman is temporarily vacant.
Ending the dispute would resolve a key bottleneck in SoftBank's efforts to
conduct an IPO of Arm, which it bought in 2016 for $31 billion. Masayoshi Son,
SoftBank's Chairman and CEO, had originally planned to sell Arm to U.S.
chipmaker Nvidia but the deal collapsed earlier this year amid opposition from
customers and regulators.
Son in February said he wants to list Arm by the end of SoftBank's fiscal year
ending next March in what would be "the largest IPO in semiconductor history."
Analysts say generating lucrative returns on Arm is key to reviving investor
confidence in SoftBank, whose share price has slumped amid a tech sell-off.
Wu pushed back as recently as Thursday, telling local media that his ouster was
illegal and attacking reports that Arm plans to extricate itself from the joint
venture by transferring its 47% stake in Arm China to SoftBank. Foreign
companies are threatening China's supply chain and technology self-sufficiency,
he said. Arm declined to comment on the share transfer, while SoftBank did not
immediately respond to a request for comment during a holiday in Japan.
In statements last week, Arm China trumpeted its progress since becoming
"independent" four years ago, and Wu said it achieved financial and
technological goals a year ahead of schedule. Its revenue has jumped 250% since
2018, the statements say, and Arm China has independently developed several
CPUs, image signal processors, neural processors and other intellectual property
amassing more than 100 local customers. Its independent IP business is expected
to generate 700 million yuan ($106 million) in 2022, according to the
statements.
Additional reporting by Cissy Zhou in Hong Kong and Cheng Ting-Fang in Taipei
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