(Yicai Global) July 29 -- Arm and Hopu Investments have recently menaced microprocessor designer Arm China’s employees, it said, pleading for the Chinese government’s attention, and charging that Arm China’s shareholder, UK-based Arm, has escalated its attacks after achieving dismissal of Arm China’s Chairman and Chief Executive Allen Wu.

This latest episode of the backbiting intrigues for control of Softbank Group-owned chipmaker Arm’s lucrative China business features Arm tussling with Chinese investors over control of the local joint venture, a source close to Arm China said. Private equity firm Hopu and other Chinese hold a 51 percent stake in the JV, while Arm owns 49 percent in Arm China, which formed in April 2018.

Arm’s chip architecture features in 95 percent of the world’s smartphones and over 95 percent of system-level chips in China.

Directors of Hopu and Arm repeatedly sent their agents to the JV’s clients and threatened to modify or cancel their current contracts with it, Arm China said in an open letter it issued on WeChat yesterday. The directors also called to intimidate and harass its staffers, per the letter.

Arm China called for shareholder disputes to be legally resolved as soon as possible to allow it to continue to independently grow.

Breaching Protocols

An investigation found Wu violated corporate guidelines and his actions were detrimental to the firm’s growth, as well as jeopardizing shareholder and stakeholder interests, Arm said in a June 10 statement.

Arm and Hopu recently agreed to unseat Wu as chairman and chief executive at a June 4 meeting of the JV's board under the guidance of Beijing-based Zhong Lun Law Firm.

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 reported in June.

The board's decision to remove Wu lacked a legal basis as the meeting at which this was done was improperly convened, Arm China claimed earlier, reacting to media reports of Wu's ouster. Wu is still in charge of the company and remains its legal representative, it added.

Editor: Ben Armour