Monday, March 8, 2021

Arm China chief earns $ 179 million on stake in chip firm client

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Arm’s China division head Allen Wu earned Rmb 1.2 billion ($ 179 million) from a personal investment he made in one of the chip designer’s Chinese clients , after falling out with Arm over alleged conflicts of interest.

Mr. Wu was 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 remove him. He remains the legal representative of Arm China and holds the company’s official stamp, making it difficult to dislodge him under a centuries-old Chinese system.

It also controls the company’s Chinese bank account, which holds between $ 500 million and $ 600 million, and has been used to pay its legal fees for a legal battle with its majority shareholders, Arm and Chinese partner Hopu Investments, according to two people. familiar. with matter.

Arm China’s bank account has been further bolstered by frequent delays in disbursing license fees owed to the UK headquarters, four people familiar with the situation said.

A person involved in the dispute between the board of directors of Arm China and Mr. Wu said he advised the local government in Shenzhen, where the joint venture is registered, to place Mr. Wu on a travel blacklist for the company. prevent leaving China and put restrictions on the bank account to avoid large transfers. Mr. Wu, 53, was born in China but is a US citizen.

An Arm China spokesperson speaking on Mr. Wu’s behalf said he was not blacklisted and the allegation was “completely fabricated.”

The spokesperson added that the operation of Arm China’s bank account was “fully in accordance” with the company’s internal controls and Chinese law.

“Payment of legal fees is made in accordance with company policies,” the spokesperson said, adding that the license fees had been paid in accordance with his obligations under the joint venture agreement.

Mr. Wu’s 1.2 billion RMB windfall comes from a 2019 investment in Bestechnic, which designs audio chips using Arm’s energy-saving plans and which are publicly listed in Shanghai this month. latest. The RMB 127 million investment was made by three investment funds under Mr. Wu’s control, including the $ 100 million fund he set up, Alphatecture.

Their 3.2 percent stake in Bestechnic had a market value of around RMB 1.3 billion on Friday. Bestechnic paid 25 million RMB in license fees to Arm China in 2019.

People close to the board of directors of Arm China claimed that Mr. Wu did not disclose his investment in client Arm when it was completed. One person added that Mr. Wu did not present the investment opportunity to the Hopu-Arm Innovation Fund, which was established to make investments in the Arm ecosystem and of which Mr. Wu was co-chair.

Mr. Wu has previously defended investing in Arm clients, claiming it was “Common practice in our industry”. Wu spokesman said the investment in Bestechnic had been “fully disclosed”.

SoftBank, owner of Arm, leads talks with Mr Wu as the battle over the Chinese joint venture delays its plan to sell Arm to US chip company Nvidia for $ 40 billion, which will also need to be approved by the US regulator. Chinese market. SoftBank said in 2018 that China contributed a fifth of the chip designer’s total sales.

Nvidia is in talks with Chinese regulators, but has yet to file a formal request to review the deal, three people familiar with the situation said.

A Chinese antitrust attorney said the delay in submitting would make it very difficult to close the deal within the 18-month deadline set when Arm and Nvidia announced it in September last year.

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Nvidia said, “The regulatory process is confidential and we will not provide commentary on milestones along the way,” while reaffirming the 18-month deadline.

SoftBank addressed questions to Arm, who said, “Arm remains steadfast in our support of Arm China and its customers.”

Qianer Liu contributed reporting.

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