A recent acquisition by Allen Wu, chief executive of Arm China, means he now owns four of the six key shareholders in the company, but the remaining two want him gone

When SoftBank agreed to sell its UK chipmaker Arm to Nvidia back in August for around $40 million, it was immediately clear that the deal would be problematic to finalise. The sheer scale of the deal alone meant that there were plenty of regulatory hoops to jump through, as well as growing politicisation of the semiconductor sector stirring sentiment around the world. 

Just last month, the head of parliament’s business committee asked the UK government to review the deal, arguing that not enough was being done to protect jobs in the company’s home city of Cambridge. A month earlier, Arm’s founder Hermann Hauser said that Nvidia’s pledges in this regard were worthless unless they became legally binding, imploring the UK government to instead take Arm public and become a cornerstone investor themselves; Arm is a technical powerhouse that the UK cannot afford to lose.
But these issues are not only taking place in the West. Today it seems that Arm’s Chinese unit will also be a source for concern for SoftBank – a fact that is particularly unfortunate since the company is imminently due to approach the Chinese regulators to get permission to progress the deal.
The issue revolves around Arm China’s chief executive, Allen Wu, who has become something of a controversial figure this year. 
In June, the Arm China’s board voted 7–1 to remove him from his position, after he was accused of numerous conflicts of interest. The largest of these involved Alphatecture, an investment firm he set up in July 2019, with Wu allegedly offering discounts to Arm China customers in return for investments into his firm.
However, despite the vote, Wu refuses to leave his position and still remains the legal representative  of Arm China, leaving SoftBank mired in a legal battle to remove him at a crucial time for the ongoing Nvidia deal. To make matters worse, Wu acquired one of the company’s key shareholders in November 2019, meaning he now controls four of the six major shareholders, equalling around 17% of the business. 
With two of Wu’s four companies now suing Arm for his wrongful dismissal, Eric Chen, head of SoftBank’s Chinese operations, has reportedly been given the charge of negotiating Wu’s exit. Specific details related to the negotiations remain sparse at present, but it appears a payout of between $100 million and $200 million were discussed. 
Ultimately, if SoftBank cannot tidy this matter up quickly, their Chinese unit could become a major thorn in their side as they try to close their monumental deal with Nvidia.  
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