Arm China Appoints Co-CEOs to Replace Ousted Rogue Executive

(Bloomberg) -- Arm Ltd.'s joint venture in China has appointed two leaders to replace ousted Chief Executive Officer Allen Wu, taking a step toward regaining control of the chipmaker's domestic operations.

The SoftBank Group Corp. unit is now closer to resolving a situation that has clouded its business in the largest market for chips. Wu was fired in 2020 for alleged conflicts of interest, but has refused to leave his post. His removal smooths the path to an IPO that could value Arm, whose designs lie at the heart of modern electronics, at $60 billion, Bloomberg News has reported.

“Arm China is in the process of resolving its longstanding corporate governance issue, and its Board of Directors has voted unanimously to appoint Liu Renchen and Eric Chen as Arm China's co-CEOs”Arm Ltd. said Thursday in an emailed statement. “Mr. Liu has also been duly registered and accepted by local Shenzhen government authorities as the company's legal representative and general manager.”

The registration of a new leader with the government will make it more difficult for Wu to continue to claim that his removal is invalid. His replacements come with strong state and finance pedigrees: Liu is an Oxford alum and deputy dean of a prominent government-backed research institute in Shenzhen, while Chen is one of SoftBank's lead executives in the country.

Wu's enduring control has created thorny problems for SoftBank and founder Masayoshi Son during an already-tumultuous time. A recent deal to sell Arm to Nvidia Corp. fell apart under regulatory scrutiny, and SoftBank is now looking to float shares of the business in an initial public offering.

The British company's designs and technology are ubiquitous, playing key roles in everything from the most powerful data-center chips to home appliances and Apple Inc.'s iPhones. The company's customer list includes many of the biggest names in technology, such as Qualcomm Inc., Alphabet Inc.'s Google and Samsung Electronics Co.

The decision to remove Wu and reassert more transparent control over Arm's China operations removes a key overhang over the business.

The official company registry on the website of the Shenzhen Administration of Market Regulation -- the local watchdog -- shows Liu is now Arm China's legal representative, while the company has not appointed a chairman.

On Friday, Wu issued a statement in Arm China's name acknowledging the change in registry but contested the legality of the appointment.

“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,” according to the statement. “This company will defend its legal rights through legal means.”