British chipmaker put up for sale by Chinese owner amid national security row

Hertfordshire: One of the UK’s major microchip firms, Imagination Technologies, is on the market. Its Chinese-backed owners are trying to sell it amid serious allegations about sensitive tech being passed to Beijing.

They’ve brought in Lazard, their long-time adviser, to help find a buyer. This comes after claims that the company shared key technology with two firms linked to the Chinese military.

It’s been a rough ride for Imagination since Canyon Bridge, a private equity firm funded by a Chinese investment group, took it off the London Stock Exchange back in 2017. The UK government even had to step in to block a takeover attempt by China Reform in 2020, which was seen as a bit of a coup.

Recently, an employment tribunal ruled that the company unfairly fired its CEO, Ron Black, for raising concerns about moving operations to China. A report even suggested that the Chinese Communist Party was stripping assets from the company.

Imagination has denied these claims but is facing serious scrutiny. Canyon Bridge thinks it can still make a profit from the £550 million it paid for Imagination. They’ve already had some interest from potential buyers.

The fund is nearing the end of its term and hasn’t made any other deals, especially since it was blocked from buying US companies. Back when Theresa May was in charge, her government allowed the sale to Canyon Bridge after Trump stopped them from acquiring a US firm.

Imagination is known for its graphics technology, which is used in everything from video games to AI systems. They claim they cut ties with the Chinese firms after they were blacklisted by the US, insisting their tech isn’t military-grade.

The company is also looking for a new CEO as Simon Beresford-Wylie plans to retire. They’ve been considering a stock market listing in the US or UK and even took steps toward a Wall Street debut.

In 2023, they reported a slight sales increase but profits took a hit due to stricter export controls on China. There’s some buzz that their tech might be featured in Google’s upcoming Pixel smartphones, which could be a silver lining.

Imagination and Lazard haven’t commented on the situation yet.