SoftBank’s arm says China CEO fired for ‘serious irregularities’

  • Corporate News
  • Wednesday, 10 Jun 2020

Pedestrians wearing protective masks walk past signage for SoftBank Corp. near a store in Tokyo, Japan, on Friday, May 15, 2020. SoftBank Group Corp. expects to book a record 1.35 trillion yen ($12.5 billion) operating loss for the fiscal year ended March 31 when it reports results on Monday. Photographer: Kiyoshi Ota/Bloomberg

SOFTBANK Group Corp.’s Arm Ltd. and its Chinese chip venture clashed publicly Wednesday over whether the venture’s CEO had been fired, a dispute that threatens to disrupt a company central to the global semiconductor industry.

The British firm said Tuesday the board of Arm China -- jointly owned by Arm and investors including China’s sovereign wealth fund -- voted to remove Chief Executive Officer Allen Wu and replace him with a pair of co-CEOs. Hours later, Arm China posted a statement to its official WeChat account asserting Wu was still in charge and the venture was operating normally. The U.K. firm then fired back to say it stood by its original statement, adding that Wu had been fired after an investigation uncovered undisclosed conflicts of interest and violations of employee rules.

"Following a whistleblower complaint and several other current and former employee complaints, an investigation was undertaken by Arm Limited,” the company said in its latest statement, jointly issued with shareholder Hopu Investment. "Evidence received from multiple sources found serious irregularities, including failing to disclose conflicts of interest and violations of the employee handbook.” The controversy comes at a sensitive time for Arm and its 49%-owned Chinese affiliate, when Western companies are struggling to navigate an escalating clash between the U.S. and China over technology leadership. Arm, a U.K.-based company whose semiconductor designs are used in the majority of the world’s mobile devices, is among the firms grappling with the uncertainty of growing tensions.

Arm Ltd. said the board had appointed Ken Phua and Phil Tang as Arm China’s interim co-CEOs. Wu didn’t respond to emails and a message sent via his LinkedIn profile seeking comment. On Wednesday, Arm China said on WeChat the executive remained in charge. "In accordance with relevant laws and regulations, Allen Wu continues to serve as chairman and CEO,” the post read.

How Huawei Landed at the Center of Global Tech Tussle: QuickTake SoftBank acquired Arm for $32 billion in 2016 in one of its largest acquisitions, a deal intended to further Masayoshi Son’s ambition of creating a global Internet of Things ecosystem.

Arm China was then formed in 2018 when SoftBank sold 51% of the subsidiary to a consortium that included China Investment Corp., the Silk Road Fund and Singaporean state investment firm Temasek Holdings. It now operates offices in Shenzhen, Beijing and Shanghai and acts as an intermediary between Arm in the U.K. and clients like Huawei Technologies Co. in the world’s largest smartphone market.

Arm licenses the fundamentals of chips for companies that make their own semiconductors, and also sells processor designs. Most of the world’s smartphones depend on Arm’s technology, and it is trying to expand into servers and PCs.

The company has been ensnared in Washington’s campaign against Huawei because of its central role in semiconductor architecture. That conflict escalated after Washington in 2019 prohibited the sale of American software and circuitry to China’s largest tech company, a key Arm client. The British company has said it will comply with the so-called U.S. Entity List restrictions.

The U.S., home to many of the world’s chipmakers and a chunk of Arm’s operations, wants to block Huawei’s access to key chip technology because it’s been labeled a national security threat -- something the Chinese firm has consistently denied.

Local media have cited Wu as saying his company will continue to work with Huawei. Arm continues to supply technology to Huawei unit HiSilicon, but it’s unclear if it can license future designs to the Chinese company. - Bloomberg

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Softbank , Arm Ltd , Allen Wu


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