An open confrontation between the Chinese and English affiliates of ARM is gaining momentum. Both sides cannot come to a compromise, therefore they turn to the Chinese government for help through social media.
ARM China (ArmChina) was founded two years ago as a joint structure between ARM UK (ArmUK) and a group of Asian investors. ArmChina recently obtained the rights to issue permits for ARM architectures to local programmers. In fact, ArmChina gained independence, since the English branch received only 49% of ArmChina. It is noteworthy that ArmUK was owned by the Japanese company SoftBank. Therefore, it was this organization that received funds from the Chinese licensees.
The difficult decision to sell a controlling stake in ArmChina to a third-party consortium was made due to the fact that the European Union submitted to the World Trade Organization a proposal to restrict China’s access to the High-Technologies market. Such a decision could impose certain restrictions on EU firms that cooperated with China ( Britain was then also a member of the European Union). Unfortunately for ArmUK, by this decision they independently removed ArmChina from their own jurisdiction, which had long-lasting consequences.
As a result, the board of ArmUK and HopuInvestment, one of the leading members of the consortium, by a joint decision removed the position of the head of ArmChina, Allen Wu, and stated that his activities began to suffer from a serious conflict of interest. This discrepancy was established through an internal investigation that began after a series of “appeals” that were received from “diligent” employees of ArmChina.
Wu is reported to have set up his own investment organization, earning a living from ArmChina’s work. An investigation has proven his “inappropriate” activities. As a result, the enterprising leader was faced with a dismissal, with which he did not agree, ordered a private guard, after which he banned English partners, as well as a new boss, from entering the ArmChina offices. This was the catalyst for an international scandal.
Approximately two hundred ArmChina employees have signed the statement that ArmChina is a “Chinese-controlled company.” Accordingly, the company is obliged to honor and abide by the laws of China, as well as follow the local principles and customs of social responsibility. ArmChina employees stated that “ArmUK harassed them and ‘pressured’ ArmChina customers in order to cancel or change signed agreements.”
“Hopu (the largest investor in ArmChina) and a number of members of the management began to engage in dialogue with the partners of the enterprise,” the statement said. They threatened to revise or completely cancel the existing agreements with the joint venture. It is worth noting that ArmChina’s revenue brings Japanese SoftBank 27% from licensing ARM technologies alone. These are truly space assets that limit the British and Japanese in active operations.
ARM responded quickly and posted a press release on their website. “ARM is fully committed to developing and integrating semiconductor innovation in the PRC through the joint company ArmChina and its employees. Alas, for almost a month after Allen Wu was fired, he refused to leave the organization, spreading false information and creating an atmosphere of fear and uncertainty among the employees of ArmChina. “
“Allen’s commitment to retaining his position in every possible way has jeopardized local semiconductor innovation by blocking critical communication channels, shielding our Chinese partners from existing and future Arm solutions and technologies.”
“The leadership of ArmChina is in close contact with the PRC government to resolve the conflict peacefully and keep Wu from committing harmful or destructive actions against ArmChina employees and partners who want to move forward confidently.”
Not all ArmChina shareholders agree with the actions of Wu, who refused to leave the company. HopuInvestment Corporation, which is the head of the consortium and sided with Arm, is radically opposed to Allen. The announcement of the resignation of the former director by decision of the ArmChina board indicates that the majority of investors from China supported the English office.
In this situation, it remains to wait patiently for the reaction of the Chinese central authorities, which may be extremely unexpected.