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The battle for the management of Anmou China escalates: the former chairman was dismissed twice, but the process was questioned

There is a new follow-up to the management dispute of ARM subsidiary Anmou Technology (China) Co., Ltd., which focuses on semiconductor design, and the company staged a new round of personnel removals today (April 29).

Nanduwan Finance Agency reporter found from the industrial and commercial registration of the Shenzhen Municipal Market Supervision and Administration Bureau: On April 28, the members of the board of directors of Anmou Technology and the legal representative and general manager of the company changed, from Wu Xiongang to Liu Renchen, wu Xiongang, who was originally the chairman and director, withdrew from the board of directors, and the board of directors temporarily did not appoint the chairman. This means that after June 2020, Wu Xiong'ang was deposed again.

However, a few hours later, a statement letter from Anmou Technology (China) Co., Ltd. on the change of registration of industry and commerce was released on the same day. The statement said that Anmou China Company has never submitted an application to the Shenzhen Municipal Market Supervision and Administration Bureau for the above-mentioned change of registration of industry and commerce. "The Company has good reason to believe that there are major legal flaws in the registration procedures for industrial and commercial changes accepted by the Shenzhen Municipal Market Supervision and Administration Bureau. The company will take legal measures in accordance with the law to safeguard its legitimate rights and interests. ”

According to industry insiders, the official seal and business license of Anmou China Company have previously been in the hands of Wu Xiongang, and the press release issued in the name of Anmou Technology (China) Co., Ltd. undoubtedly represents Wu Xiongang's voice.

The battle for the management of Anmou China escalates: the former chairman was dismissed twice, but the process was questioned

Anmou China's original legal representative was changed

In early April, foreign media reported that ARM had transferred all of its equity stake in Anmou Technology to SPV, a special-purpose company in which parent company SoftBank Group is the majority shareholder. On April 27, it was reported that SoftBank and ARM planned to remove Wu Xiongang, the current CEO of Anmou Technology.

On the morning of April 29, a public relations company issued a press release in the name of Anmou Technology (China) Co., Ltd., saying that its board of directors passed a unanimous resolution in accordance with the company's articles of association and relevant laws and regulations, hired Liu Renchen and Chen Ke as co-CEOs of Anmou China, and completed the industrial and commercial registration according to law.

Industrial and commercial information also shows that the legal representative of Anmou Technology has been changed to Liu Renchen on April 28. In addition, Elizabeth Ann Crosier (supervisor) and Graham Stephen Budd (director) withdrew, adding Liu Renchen as general manager, Gyu Hak Moon as director, Luo Yingcun as director, and Adam David Westhead as supervisor. Anmou Technology said that Mr. Liu Renchen and Mr. Chen Ke will jointly lead the Anmou China team to ensure that the company operates as usual.

The battle for the management of Anmou China escalates: the former chairman was dismissed twice, but the process was questioned

According to the data, among the two newly appointed co-CEOs, Liu Renchen is the vice president of the Research Institute of Tsinghua University in Shenzhen, and Chen Ke is the managing partner of the SoftBank Vision Fund.

However, a few hours later, a statement letter on the registration of the change of industry and commerce, which was paid for by "Anmou Technology (China) Co., Ltd.", disclosed that "for a long time before the registration of this change of industry and commerce, there have been disputes within the company over the replacement of the members of the board of directors and in the course of judicial proceedings, which means that at this stage, the company cannot convene and form a valid company resolution." In fact, the Company has never held any board meetings in connection with the aforesaid changes, nor has it made any relevant corporate resolutions. The Company has never submitted the above-mentioned application for industrial and commercial change registration to the Shenzhen Municipal Market Supervision and Administration Bureau. The Company has every reason to believe that there are major legal flaws in the registration procedures for industrial and commercial changes accepted by the Shenzhen Municipal Market Supervision and Administration Bureau. The company will take legal measures in accordance with the law to safeguard its legitimate rights and interests. ”

According to industry insiders, the official seal and business license of Anmou China Company have previously been in the hands of Wu Xiongang, and the press release issued in the name of Anmou Technology (China) Co., Ltd. undoubtedly represents Wu Xiongang's voice.

This means that the battle for management rights by Anmou China companies is still continuing.

The battle for control followed

Industry insiders told the Nanduwan Finance Agency reporter that one of the parties to the management dispute is arm China's board of directors, behind which is arm group and its parent company SoftBank Group; the other side is Anmou China CEO Wu Xiongang.

ARM is the world's leading semiconductor designer, and more than 90% of the world's smartphones and tablets use arm architecture. ARM does not produce its own chips, but earns its income by selling intellectual property rights such as design drawings to semiconductor manufacturers. Arm's business model has two main ones: one is a license fee, and the other is a loyalty.

On June 5, 2018, SoftBank Group announced that its chipmaker ARM has agreed to sell a consortium led by Hou On Innovation Fund for $775.2 million from its Chinese subsidiary ARM Technology China to form a joint venture for Arm.

In the same year, Anmou China was formally established, with a valuation of 10 billion yuan for the joint venture company, 51% of which was controlled by Chinese-funded and 49% held by ARM, of which Chinese investors signed a concerted action agreement. Formerly an Arm China executive, Wu joined ARM in 2004, Vice President of Sales in China in 2007, General Manager and Vice President of Sales for China in 2009, President of China in early 2011, President of Greater China in January 2013, and joined ARM's Global Executive Committee in January 2014. After the establishment of Anmou Technology China, Wu Xiongang served as the chairman, CEO and legal representative.

Arm has previously confirmed that it has transferred its stake in Arm China to a company jointly held and controlled by ARM and SoftBank (ARM's current majority shareholder, SoftBank). ARM will continue to hold an equity stake in Anmou China through this company.

The trigger for a dispute over China's internal control took place on June 4, 2020. At that time, ARM and Hopu Fund joined hands to convene the board of directors of Anmou Technology, and dismissed Wu Xiongang, chairman and CEO of Anmou Technology, with a 7:1 vote, but Wu Xiongang held the company's official seal and refused to recognize the board resolution.

On June 10, 2020, ARM and Hopu Fund said they had convened a board meeting to remove Wu Xiong'ang from his position, citing a conflict of interest and appointing two new co-CEOs.

But Mr. Wu soon issued a statement saying the board had not been convened through legal procedures and that the resolution was invalid. It is precisely because of this procedural loophole that the two-year-long dispute between the two sides has laid the groundwork. Wu Xiongang, who holds the official seal and business license, has been reluctant to obey the board's arrangement.

In Anmou China's shareholding structure, the UK-based ARM Limited holds a 47.33% stake, the largest single shareholder, while Hopu Investment-controlled Amber Leading (Hong Kong) Limited holds a 36% stake, making it the second largest shareholder. But even if the largest and second-largest shareholders joined forces, they ultimately failed to get the chairman to hand over power.

Wu Xiongang revealed to the media at that time that when the joint venture was established, Chinese investors, including Hopu Investment, signed a concerted action agreement. "According to the regulations, major decisions of joint ventures, including governance structures, must be unanimously agreed by the Chinese shareholders who hold 51%of the shares."

One of the sayings circulating in the industry is that Wu Xiongang has always wanted Anmou China's system to be more independent, including the financial system, rather than becoming a subsidiary of ARM Group, Anmou China currently has a permanent and exclusive license to market and sell ARM chips in China, and obtains a share of sales revenue, for its internally developed intellectual property (IP), Anmou China can get 100% of the revenue.

However, since ARM Group's business model has always been obtained through license fees and royalties, the "sharing relationship" between Arm Group and it is not transparent, and the intellectual property (IP) fees developed in China will not be paid to the Group, which is a conflict of interest with Arm Group.

In addition, some insiders revealed that another contradiction between the two sides also stems from the transparency of financial needs required for ARM listing. According to media reports, after the infighting in Anmou China, the royalties and licensing fees collected by Anmou China in the past two years have not been paid to the British ARM, and there are still 400 million US dollars in cash on the account. According to the original regulations, anmou China's self-developed IP is exclusive to income, but if it is ARM's IP, it needs to give ARM a share, and the proportion of sharing is as high as 70% or 80%.

The industry is concerned that Anmou China's mandate will not be sustainable

As for the consequences of the battle for control in China, there is widespread concern in the industry about the sustainability of its patent licensing.

Before the establishment of the joint venture company Anmou China, the licensing agreements of Chinese chip companies were signed with ARM's UK headquarters, but with the establishment of Anmou China in 2018, all Chinese customers switched to signing licensing agreements with Anmou China, including ARM's big customer Huawei HiSilicon.

According to the latest information released by Anmou China's official website on April 23, since its establishment four years ago, the overall revenue of Anmou Technology has increased by 250% from 2018 to 2021. There are more than 800 employees in Shenzhen, Shanghai, Beijing, Chengdu and other places, of which the number of high-end R & D personnel accounts for more than 80%. At present, there are more than 300 authorized partners in China, and the cumulative shipment of partner chips has exceeded 25 billion pieces.

Anmou Technology said that in the past four years, it has launched the XPU series of independently developed intelligent data flow computing platforms, including "Zhouyi" NPU, "Xingchen" CPU, "Shanhai" SPU and "Linglong" ISP and VPU processor product lines. At present, the cumulative number of related core technology patents is nearly 300, and more than 100 Chinese customers have been licensed, and more than 30 customers have achieved tape-out and mass production.

In 2021, the shipment of chips of Anmou Technology's self-developed processor IP partners has exceeded 100 million pieces, and it is expected that the revenue of self-developed business will exceed 700 million yuan in 2022.

However, it is clear that the current sudden change of coaching is likely to affect the company's operation in the short term, as well as the maintenance and development of business in the Chinese market. The industry is worried that if ARM subsequently interrupts IP cooperation with Anmou China, it means that the various authorizations signed by Chinese customers and Anmou China will be difficult to sustain. However, ARM Group has previously issued a statement saying, "Anmou China will continue to serve as the main commercial distribution channel for ARM to license its IP to Chinese licensed customers." ”

Written by: Kong Xueshao, reporter of Nandu Bay Finance Agency

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