(Yicai Global) June 11 -- The internecine battle for control of Softbank Group-owned chipmaker Arm’s Chinese business rumbles on. Arm’s accusation that Arm Technology China Chairman Allen Wu is guilty of serious violations is false, and Arm China will seek legal recourse against the persons responsible, the unit said in a statement today.

UK-based Arm -- whose chip architecture features in 95 percent of the world’s smartphones -- did not correctly convene the board meeting on June 4 or generate effective legal documents that led to the personnel changes, Shanghai-based Arm China said in the statement appearing on its account on China’s Twitter-like Weibo.

Arm has been wrestling with Chinese investors over control of the local joint venture, a source close to Arm China said. Hebei province-based private equity firm Hopu Investment Management and other Chinese investors hold a 51 percent stake in the local JV with Arm, which owns 49 percent.

“Evidence received from multiple sources found serious irregularities, including failing to disclose conflicts of interest and violations of the employee handbook,” Arm said in its statement

Phil Tang, who Arm appointed to replace Wu, was dismissed on May 26 for serious violations and no longer performs any functions for the company, whose operations are normal, and which will continue to provide customers with quality products and services, Arm China said in today’s statement.

Wu violated corporate guidelines and his actions were detrimental to the firm’s development as well as jeopardizing shareholder and stakeholder interests, an investigation has revealed, Arm said in its statement yesterday.

Joint Succession

Arm and its partner Hopu Investment recently agreed that toppling Wu as chairman and chief executive of Arm China was in the unit’s best interests. The decision was taken at a June 4 meeting of the JV’s board under the guidance of Beijing-based multinational law firm Zhong Lun.

Arm wants to appoint vice presidents Ken Phua and Phil Tang as co-CEOs of the joint venture to replace Wu, 21st Century Business Herald cited the parent as saying yesterday.

Reacting to media reports of Wu’s ouster, Arm China had earlier said that the board’s decision to remove him was legally invalid as the meeting was not correctly convened. Wu is still in charge of the company and remains its legal representative, it added.

Arm and Hopu countered that Wu was ejected on June 4 after tips from a whistleblower and employees triggered a probe.

Wu, who is at the center of this power struggle, joined the company in 2004 and served as its general manager and vice president of sales in China in 2009. He became president of the China business in early 2011 and joined Arm’s global executive committee in 2014.

Shunning the Limelight

Ken Phua, who was appointed by Arm to succeed Wu, came aboard the company in 2005. He is its vice president for Growth Strategy & Planning.

Arm China, whose revenue derives from licensing chip architecture to Chinese firms, formed in 2018 when SoftBank sold a 51 percent share of Arm’s Arm China unit to a consortium of Chinese investors. SoftBank bought Arm in 2016 for USD32 billion.

Editor: Ben Armour