China News: CEO Hijacks Semiconductor Company

china-semiconductors

Summary

Arm China’s CEO was fired from his position last year, but has effectively hijacked the company by holding onto the official seal needed to fire him. Now Arms China is rebranding into an independent entity and supposedly working on its own chips. A legal battle is underway.

TLDR takeaway: Always know where your company seal is.

china-company-official-seal

Arm is a UK based semiconductor IP firm which entered China as a Joint Venture (JV) in 2018 with 49% owned by SoftBank and the other 51% by various Chinese investors. Allen Wu was appointed CEO of the company in China and was voted out 7 to 1 from the position by Arm China’s board back in June 2020 for allegedly offering discounts to Arm China’s clients if they invested in his own company, Alphatecture.

Only problem was that Allen Wu is the CEO and legal representative of Arms China and is in possession of the company seal (company chop). In China, the company chop holds immense power and is required to replace the legal representative of the company. Since the takeover, Allen has reportedly fired all opposing executives from Arms China and hired security to keep them and other Arms China (ex)employees away from the company building.

While it has been reported that no IP-theft has occurred, Arm has lost control of it’s Chinese subsidiary which has the sole rights to Arms products in China and the two entities are in a legal battle. Arm China continues to work with Arms and distribute its products in China, but the company is in the process of reforming into an independent entity and producing its own semiconductors.

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