The head of Arm’s Chinese company, Allen Wu, made a profit of Rmb1.2 billion ($ 179 million) on a personal investment he made in one of the chip designer’s Chinese clients after falling out with Arm about alleged conflicts of interest.
Mr. Wu has been fighting Arm for control of the Chinese joint venture since June last year, when he ignored a 7-1 vote by Arm China’s board of directors to dismiss him. He remains the legal representative of Poor China and has the company’s official stamp, making it difficult to dislodge him under an ancient Chinese system.
He also controls the company’s Chinese bank account, which contains $ 500 million to $ 600 million, and has been used to pay his legal fees for a lawsuit involving its majority shareholders, Arm and Chinese partner Hopu Investments, according to two well-known people. with the issue.
Arm China’s bank account is further strengthened by frequent delays in transferring license fees due to the UK headquarters, four people close to the situation said.
A person involved in the dispute between Arm China’s board of directors and Mr. Wu said he had advised the local government in Shenzhen, where the joint venture is registered, to blacklist Mr. Wu for travel to prevent him from leaving China and to restrict the bank account to prevent large transfers. Mr. Wu, 53, was born in China but is a US national.
A spokesperson for Arm China speaking on behalf of Mr Wu said he had not been blacklisted and the accusation was “completely fabricated”.
The spokesman added that the operation of Arm China’s bank account was “in full compliance” with the company’s internal controls and Chinese law.
“Legal fees are paid in accordance with company policy,” said the spokesman, adding that licensing fees have been paid in accordance with its obligations under the joint venture agreement.
The windfall of Mr. Wu’s Rmb 1.2 billion came from a 2019 investment in Bestechnic, which designs audio chips using Arm’s energy-efficient blueprints and was publicly listed in Shanghai last month. Rmb127m’s investment was made by three investment funds under Mr. Wu’s control, including the $ 100 million fund he founded, Alphatecture.
Their 3.2 percent stake in Bestechnic had a market value of approximately Rmb1.3 billion as of Friday. Bestechnic paid Rmb25m in licensing fees to Arm China in 2019.
People close to Arm China’s board claimed that Mr. Wu did not disclose his investment in the Arm customer when it was made. One person added that Mr. Wu had not offered the investment opportunity to the Hopu-Arm Innovation Fund, which was created to invest in Arm’s ecosystem and which Mr. Wu was co-chairing.
Mr. Wu has previously defended investing in Arm’s customers, saying this was “common practice in our industry.” Mr. Wu spokesman said the investment in Bestechnic has been “fully disclosed”.
SoftBank, the owner of Arm, is leading negotiations with Mr. Wu as the battle for the Chinese joint venture is delaying its plan to sell Arm to US chip company Nvidia for $ 40 billion, which also requires approval from the Chinese market regulator. SoftBank said in 2018 that China contributed one-fifth of the chip designer’s total revenue.
Nvidia is in talks with Chinese regulators, but has not yet formally filed for a review of the deal, three people close to the situation said.
A Chinese anti-trust attorney said the delay in filing would make it very difficult to close the deal within the 18-month time frame set out when Arm and Nvidia announced it last September.
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Nvidia said, “The regulatory process is confidential and we will not comment on milestones along the way,” as we reaffirm the 18-month timeline.
SoftBank referred inquiries to Arm, stating, “Arm remains steadfast in our support of Arm China and its customers.”
Qianer Liu reported.