Arm’s China boss payout talks threaten to detail $40bn Nvidia bid

Arm China’s chief executive is attempting to negotiate a nine-figure exit fee as the $40bn (£30bn) sale of the UK chip maker faces further hurdles to completion.

Allen Wu, boss of Arm’s China joint venture, has refused to stand down after he was voted out by the company’s board in June.

The dispute threatens to derail Nvidia’s $40bn takeover of Cambridge company Arm, which needs the approval of China’s market regulator and the co-opeartion of Arm China.

The executive is now negotiating a huge exit package from Arm China after it emerged he controlled 17pc of shares in the company, according to the Financial Times. 

Arm is viewed as a strategically important company due to its semiconductor designs, which are used in billions of smartphones around the world. 

Mr Wu is said to have been in talks in September for a settlement of between $100m and $200m.

However, the chief executive is now said to be arguing for an even larger payout, claiming Arm China is valued at around $7.5bn. A source told the FT the chance of a deal was “50-50”.

Nvidia and Arm declined to comment. Mr Wu did not respond to a request for comment.

Arm China’s shareholder register includes six investors, four of which are controlled by Mr Wu. Arm has a minority stake of 49pc, while Hopu, a local investment fund, controls the remaining share. 

Arm and Hopu voted to oust Mr Wu in June amid claims he set up a venture investing fund, Alphatecture, without the knowledge of the board. The Arm China boss has even taken to posting his own security to deny entry to Arm officials.

The Chinese business has appealed to Beijing to “protect” it from interference, while Arm’s UK team has claimed its China staff are operating under a “culture of fear”.

Chinese technology companies have already expressed concerns about Arm’s takeover by Nvidia, a US company. 

Arm, which was bought by Japan’s SoftBank in 2016, originally founded its China joint venture in 2018, selling a $775m stake. While the business mainly licences Arm’s UK-made designs, it has also been working on its own semiconductor technology. Executives had planned to ultimately list the business in China.