Allen Wu has defended his move to seize control of Arm’s China business, as new details emerged about the personal $100m investment fund that caused him to fall out with the UK chip designer and its backers.
In his first interview with an international media outlet, Mr Wu said Arm and its Chinese partner Hopu had no right to try to oust him as the head of Arm China in June.
He denied it was a conflict of interest to be personally invested in companies that would benefit from cheaper licences from Arm. He also said that Arm and Hopu both knew and supported his plans.
Mr Wu claimed that his fund, Alphatecture, had been “discussed and disclosed to the board from the beginning. We have received support.”
He claimed that a 7-1 vote by Arm China’s board in June to dismiss him was invalid, because of an agreement he had with Hopu that they both needed to be in “alignment and agreement” on all major issues regarding Arm China. He also suggested the procedure for calling the board meeting had been incorrect “and that is one of the issues we are working on”.
Hopu’s legal counsel said the agreement did not cover board decisions. Arm said the board of the joint venture “determined that a leadership change was required and we are confident a resolution will be reached soon”.
Arm’s failure to actually remove Mr Wu, who continues to be in legal control of the China unit, is a stumbling block to a $40bn takeover of the UK chip company by Nvidia.
“All these challenges can be solved . . . it is natural for people to have different opinions,” Mr Wu said.
Meanwhile, it emerged that Pavilion Capital, a wholly owned subsidiary of Singapore state investor Temasek, had pledged $50m for Mr Wu’s personal fund, according to three people familiar with the matter. Pavilion declined to comment.
Mr Wu also lined up investments from two Arm China board members last year. One of the board members then sought an investment from Arm China this year.
“Nobody on the board knew about a lot of the behind-the-scenes arrangements,” said one Arm China board member. “There were so many interests that were intertwined.”
Fundraising documents seen by the Financial Times show Mr Wu played on his position at Arm China to attract investors and used its employees to run the fund. “Mr Wu staying as the core leadership of Arm China makes sure our fund is best positioned to access its value chain resources,” the materials said.
Mr Wu said it was “common practice in our industry” to invest in partners.
To prove that Arm was aware of his plans, he asked an external lawyer, Jason Cheng at Dentons, to briefly show notes apparently from a board meeting where Simon Segars, Arm’s chief executive, had spoken positively about the fund. The notes also showed the Arm China board “approved” a $30m investment in Mr Wu’s fund.
One person close to the board later sent the FT what seemed to be the same document which showed the word “approved” crossed out in pencil and replaced with “idea to be further explored”. The person said Mr Wu’s initial draft of the August 2019 meeting had been rejected.
Arm said: “The Arm China board advised Allen Wu that he could explore the possibility of setting up a fund, but Alphatecture was never approved by the board.”
Qianer Liu contributed reporting from Shanghai