Arm China has finally replaced renegade CEO Allen Wu nearly two years following Wu's dismissal by the company's board. How did he stick around so long, you ask? He had possession of the company's seal stamp, called a 'chop'—a centuries-old business practice likened to a more formal signature in the West—handing him the ability to effectively ignore what he was told by the board and continue doing what he liked.
Arm China is actually a joint venture between Arm, the UK-based chip designer owned by Japanese firm Softbank, and a Chinese investment firm called Hopu. Arm Ltd only owns a minority stake, but its involvement is key as one of the world's largest chip designers.
Arm China's board wanted to boot Wu following concerns over conflict of interest, which Wu still denies. The board technically did boot Wu over these claims in June 2020, in fact, but Wu denied he was fired, too.
Wu even attempted to fire his board-appointed replacements and reportedly installed his own security team in the company's Shanghai offices to keep out Arm and Hopu representatives from getting in. At one point, it was reported that Arm China had announced its independence from Arm entirely, and had even set up its own R&D department.
In the eyes of the powers that be in China's Shenzhen region—a sprawling tech hub—Wu was the legal representative for Arm, and there wasn't much that could be done while the company chop was in his possession and he retained the ability to sign off on legal documents as Arm China.
However, this two-year facade may well have come to an end. Arm China, with help from the local authorities, has now successfully replaced Wu with co-CEOs Liu Renchen and Eric Chen, it says in a statement. Clearly two CEOs are safer than one, in case one should get ideas above their station.
The local Shenzhen government has also accepted Liu as the company's legal representative. That means, unlike the first time Wu was dismissed, a new company chop should be created and Wu will no longer be able to circumvent the board's wishes legally.
“Arm China is in the process of resolving its long-standing corporate governance issue, and its Board of Directors has voted unanimously to appoint Liu Renchen and Eric Chen as Arm China's co-CEOs,” the company said in a statement (via Nikkei Asia). “Mr. Liu has also been duly registered and accepted by local Shenzhen government authorities as the company's legal representative and general manager.”
The local area watchdog, the Shenzhen Administration of Market Regulation, has also updated the registration to reflect Liu as Arm China's new legal representative (via Bloomberg), so Wu's ousting appears complete.
During this joint venture's tumultuous two years, Nvidia tried, and failed, to purchase Arm from its owners Softbank. Now Softbank is looking to take the company public, with an IPO likely to be launched in the US in the near future. Arm China was a thorn in the side of any IPO the company could have launched, as it likely was in Nvidia's during its buyout attempt, and I'm sure the Japanese parent company will be happy to finally have wrestled back control.
Wu isn't too happy about the dismissal and reregistering of the company in somebody else's name, as you might expect. There will likely be legal challenges, and Wu has released a statement threatening something to that effect.
“This company has good reasons to believe there are serious legal flaws with the company registry change that the Shenzhen Administration of Market Regulation has handled,” Wu's statement says. “This company will defend its legal rights through legal means.”
Wu still refers to the 'company' as something he has control over, but it might not be long before he'll have to stop all that and try to score another job. Anyone looking for a new CEO?