[SAN FRANCISCO] Arm, the chip designer owned by SoftBank Group, accused the ousted head of its China joint venture of hurting its business there, escalating a dispute that's becoming a test of Beijing's willingness to protect foreign investment in the world's second-largest economy. Read more at The Business Times.
Arm is responding to Mr Wu's latest salvo, a public letter which accused representatives of the UK company of going directly to customers and threatening to amend or cancel contracts if they didn't stop dealing with Arm China. The letter, posted on Arm China's social media accounts and issued under the name of its employees, also said the Chinese venture had the exclusive rights to sell Arm's products in the country.
Both parties are arguing that the longer things drag on the worse the impact will be on the Chinese chip industry, which relies on Arm's technology. They also urged the Chinese government to intervene and resolve the disagreement. If and when the authorities in the world's most populous country get involved, their actions could provide a major indicator of Beijing's willingness to uphold the rights of overseas investors on its soil.
SoftBank bought Arm, which then operated under a different name, in 2016, initially gaining full control over the Chinese subsidiary. SoftBank gave up a majority stake of Arm China in 2018 when it sold more than half to an investment group. It now owns 49 per cent through Arm. The consortium that bought 51 per cent of Arm China includes China Investment Corp, the Silk Road Fund and Singaporean state investment firm Temasek Holdings.
The intricacies of Chinese rules confer an advantage to Mr Wu as the holder of key registration documents. As the legal representative of Arm China, Mr Wu holds the company's registration documents and the company seal, or stamp. Changing the legal representative requires taking possession of the company stamp - something Mr Wu has refused to give up. Arm and the investors could go through the courts, but the process could take years.
Arm's technology underpins the most important component in almost all of the world's smartphones and is making headway in other markets such as personal computers and servers. The company sells chip designs and licenses the fundamental technology that allows chips to communicate with software to companies that prefer to design their own.For daily updates on weekdays and specially selected content for the weekend.
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