BEIJING, June 20 (Xinhua) — Arm, the chip designer of SoftBank Group, ousted Wu Xiong-ang, the CEO of a Chinese joint venture, because they discovered that Wu had set up an investment firm that competes with ARM’s own business in China, Bloomberg reported.
Wu Xiongang, THE CEO of ARM China, has set up a fund called Alphatecture to invest in companies using ARM technology, according to people familiar with the matter. It is common and legal for chip companies to use investment units to provide financial assistance to start-ups that cannot afford expensive components. But the problem is that ARM China-owned ARM and Hopu Investment Management already own such a fund. People familiar with the matter said Mr. Wu’s investment firm was in direct competition with his employer.
Meanwhile, Masayoshi Son, SoftBank’s chairman, and Simon Segars, ARM’s chief executive, outlined the reasons for ousting Mr. Wu in a document sent to Mr. Fang Fenglei, the chairman. The document says Wu was ousted for defaulting and deciding to set up the Alphatecture fund. In explaining the reasons for ousting Mr. Wu, ARM and Mr. Hopoate said the investigation had found Mr. Wu’s violations and conflicts of interest, but did not specify what kind of conflict of interest it was.
Arm is currently engaged in a war of words with Wu Xiong-ang. Wu refused to budge and used ARM China’s WeChat account to intensify its confrontational efforts. As ARM China’s legal representative, Wu Xiongang holds the company’s registration documents and seals. ARM needs to have a company seal if it wants to adjust legal representatives, but Mr Wu refuses to give it. ARM and Hopu can only be resolved through the courts, but the process could take years.
Arm’s China board voted 7-1 to remove Wu xiong-ang after ARM completed its investigation into him. ARM is increasingly concerned about ARM’s intellectual property, assets and finances in China, given Mr Wu’s refusal to let hyun. If Wu is not expelled in time, ARM will consider suspending its support for ARM China. ‘This is a last resort, ‘ said people familiar with the matter. When the U.S. first banned the sale of U.S. software and chips to Huawei last year, local Chinese media repeatedly quoted Wu as saying ARM was committed to working with Huawei.
In addition, ARM China’s management disputes have become another headache for SoftBank. SoftBank suffered a record operating loss in May, largely because of a writedown by Vision Fund on its investment company.
Wu and ARM China have yet to comment. ARM and Hopu have previously issued a statement removing Wu Xiong-ang, declining to comment again.