The trouble, which came to light earlier this month (see ARM in struggle for control of Chinese subsidiary ), stems from financial dealings in support of China startups that ARM has described as irregular and a "conflict of interest," the report says. However, the report references an unnamed supporter of Wu saying the moves were merely the implementation of company policy.
The key element in the dispute is a fund called Alphatecture Hong Kong Ltd., set up by Wu in July 2019 to invest China startups. The report states that Wu asked the board of directors of ARM China for approval to create Alphatecture in November but this proposal was not passed. The board later found out the fund already existed.
The report quotes an unnamed member of the board of directors supportive of Wu saying that the board had discussed the need to develop the ecosystem for ARM in China and that Wu had merely taken the initiative. The supporter said everyone on the board knew of the moves to back startups.
However, Wu allegedly offered discounted access to ARM's intellectual property if potential customers would invest in the venture capital fund, which was effectively his private fund, the report states.
While ARM's parent, SoftBank, and private equity firm Hopu, a key partner in ARM China, are seeking to remove Wu, but face a long legal battle to force him out, the report said.
If Wu is persuaded to leave there is a risk that several other ARM China executives will also leave, the report said. Investigations are continuing into the complex connections between Wu, other directors of ARM China and Alphatecture, the report added.
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