Arm China Investor Sues Company, Escalating CEO Spat Amid Sale

Arm China investor sues company, escalating CEO spat amid sale

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SHANGHAI (Reuters) - The Chinese division of UK-based chip designer Arm Ltd has been sued by an investor over its board’s attempt to oust the unit’s chief executive, escalating an internal dispute at a time when the tech group is on the verge of being taken over in a $40 billion deal.

The legal case, which has not been reported, was launched by Ningbo Meishan Bonded Port Area ARM Investment Management Partnership and went through a pre-hearing in a Shenzhen court last week, court records show. The pre-hearing was closed to the public and no further details were immediately available.

Arm is involved in a standoff with Allen Wu, the chief executive of its Chinese division, Arm China. He has refused to step down amid allegations of breaches of conduct.

The dispute could be a complicating factor as Softbank, Arm’s owner, seeks to sell the chip company to Nvidia. Arm China is Arm’s gateway to the world’s biggest smartphone market, where its blueprints for powering chipsets are a critical component for many Chinese companies.

An Arm spokesperson at its UK headquarters in Cambridge declined to comment on the legal case. A Nvidia spokepsperson did not respond to a request for comment. Ningbo Meishan did not respond to a request for comment and neither did law firms representing Arm China and Ningbo Meishan.

Arm co-owns Arm China with Chinese private equity firm Hopu Investments. Hopu did not immediately respond to a Reuters’ request for comment placed after business hours.

In June, Arm and Hopu tried to remove Wu as Arm China’s chief executive after finding what they said were serious irregularities in his conduct. They said they included failing to disclose conflicts of interest and violations of the employee handbook.

Arm China put out statements saying that Wu continued to be its CEO and that its operations were carrying on as normal. It also denied Arm’s allegations against Wu.

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