Ex-CEO of ARM China refuses to step down

In an unusual turn of events, the former CEO of ARM's China subsidiary is refusing to step down. Last month, ARM fired Allen Wu over undisclosed breaches of conduct but Wu refuses to hand over control. Bloomberg reports the ousted CEO of ARM China even hired own security guards to block ARM executives from entering the premises:

Wu has hired his own security and won’t let representatives of Arm Ltd. or his board on the premises, said a person familiar with the situation. He’s refused to hold a planned event to connect Chinese chipmakers with Arm Ltd. and avoided negotiations despite public statements to the contrary, said the person, who asked not to be named.

Wu is “propagating false information and creating a culture of fear and confusion among Arm China employees,” the U.K.-based company said in a statement. “Allen’s focus on his own self-preservation has also put China semiconductor innovation at risk as he has attempted to block the critical communication and support our China partners require from Arm for ongoing and future chip designs.”

ARM China deals with local customers like Huawei and is a strategic piece of ARM's business as it has exclusive rights to sell ARM's product in the country. Bloomberg says Wu got fired in June after the discovery that he set up an investment firm to compete with ARM's Chinese business.

Under Chinese law, Wu is the holder of key registration documents as he is the legal representative of ARM China. He holds the company seal, which needs to be given up to change the legal representative of ARM China.

ARM China claims no wrongdoing, they dispute ARM's claims and add that Wu is open to talks and there have been no disruptions in business between ARM and its Chinese clients.

Bloomberg report the case will be an interesting test of China's willingness to protect foreign investment in the country. A poor resolution may cause firms to think twice about future investment in the country.