The ARM China soap opera never ends. While the board of directors has once again ordered the resignation of CEO Allen Wu, he clings firmly to his post. This grotesque case has been dragging on for two years. An obstacle for the IPO of the parent company ARM by its owner, SoftBank.
ARM China wants to keep its status
On April 29, the chipmaker devised a new plan for Wu’s departure as CEO. He was to be replaced by two co-directors, Liu Renchen, a government adviser, and Eric Chen, a SoftBank negotiator in discussion with the authorities. While we thought the case was on track to be resolved, Allen Wu still did not move from his seat.
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In early May, SoftBank completed the necessary paperwork to secure the takeover of ARM China. At the same time, a message was broadcast through the company’s online networks. This one was written by employees who oppose management changes.
The Register reports that this message accuses ARM of wanting to take control of ARM China, while it owns minority shares in the joint venture. A Chinese consortium has owned 51% of the shares since 2018. According to Wu, the acquisition plan would ignore ARM China’s primary goal: to supply chips to the Chinese market. If the acquisition is completed, the Chinese company would become an uncontrolled affiliate. This status would prevent him from having free access to ARM licenses.
Lawsuits for misinformation?
Reuters reveals that the company is considering legal action against anyone who uses ARM China’s social networks to spread ” false information “. Indeed, Wu and his supporters use ARM China’s social networks to express their opposition. They also use WeChat and other websites associated with the company to spread their messages.
On Thursday May 5, ARM China said via its Weibo account that “Wu refuses to comply with the decision of the board of directors, he has deliberately defied the law and he refuses to hand over his duties of managing the company. The company says that from now on it will speak only through its Weibo account to avoid confusion with Wu’s posts.
It is impossible to know when the situation will be resolved. ARM China accounts for 25% of ARM’s annual revenue. The revolt of Wu and some employees within the subsidiary could make its IPO less profitable. This must be done before March 2023 if the situation does not deteriorate.