02-12-2020 | By Robin Mitchell
The acquisition of ARM by NVIDIA is one of the industries biggest deals but is being hampered by just one individual from China; the CEO of ARM China. What is NVIDIA paying for ARM, how is the CEO of ARM China causing issues, and how could the situation be resolved?
NVIDIA, a well-known designer and manufacturer of GPUs and accelerated hardware systems, is in the process of purchasing the controlling stake of ARM from its parent company, SoftBank. The deal, which is worth more than $40 billion, hopes to see NVIDIA integrate ARM products into theirs, while also expanding the potential market for ARM.
This is not the first instance of a semiconductor business diversifying its products and market reach; Intel purchased Atmel for the integration of FPGAs and other programmable hardware, while AMD recently purchased Xilinx for similar reasons. NVIDIA, whose primary focus is on GPUs, will now be able to develop ARM products with their GPUs in mind, thus potentially changing future ARM products for the benefit of NVIDIA.
Of course, the deal between NVIDIA and SoftBank is yet to be finalised, and one individual in China is currently standing in the way of the lucrative deal; Allen Wu.
Not much is known about Allen Wu but is linked-in page tells us of his past education and career. According to his profile, Allen Wu first studied at the University of Michigan in MSEE / BSEE Electrical Engineering, and then went on to earn an MBA at the University of California. After this, Allen Wu went on to do an executive program at Stanford University. His first experience is listed as being the President of ARM Greater China from July 2014 to April 2018, and after this was made chairman and CEO of ARM Technology (China) from April 2018 till the present day.
For those who may remember, back in June 2020, ARM UK instructed Allen Wu to be fired from his CEO position. Instead of conceding control, Allen Wu has hired personal security to the premises of his workplace and has instructed that no members of ARM be allowed onto the premises (it’s important to understand that ARM and ARM China are two separate entities that operate as a joint venture). What did ARM consider to be the conflict of interest?
All the issues started when Allen Wu started an investment fund, called Alphatecture, and presented his request to the ARM China board. The idea behind the fund was that Chinese manufacturers and developers could be given discounts on ARM intellectual property in exchange for investment into the fund. Despite being denied, the board were aware that Allen Wu continued with his plan. Since Allen Wu is involved with the fund (most likely being the owner), that potential profits from both ARM China and ARM would be diverted to Allen Wu directly. When this was brought to the attention of ARM, the clear and obvious conflict of interest was deemed inappropriate, and hence his firing quickly ensued.
With Allen Wu refusing to step down from his position, NVIDIA is unable to move on with the deal until the matter is resolved. Of course, in such a situation, the CEO can be forcibly removed from his office for trespassing. Still, in China, the situation is not entirely straightforward, and Allen Wu has another trick up his sleeve!
Despite ARM instructing his firing, some of the shareholders of ARM China have brought forward legal action stating that the firing is wrongful dismissal; thus, halting the firing process. While ARM China is made up of 6 major shareholders, information published by Financial Times suggests that of these 6 shareholders, Allen Wu has control of up to 4 either directly or indirectly. The ability to dismiss Allen Wu is further complicated when financial data shows that Allen Wu, during his time as CEO, has increased the worth of the business by five times with a total value of $7.5 billion.
The current situation with ARM China and ARM put the NVIDIA and ARM deal at risk due to the desire for NVIDIA to enter the Chinese market. For both ARM and NVIDIA to enter the Chinese market themselves, they require the endorsement of the marketplace regulator, and such a move will require strong co-operation. Thus, the entire deal between ARM and NVIDIA could rest on the desire of a single person, Allen Wu.