Chip developer Imagination woos ex-minister Vaizey in wake of Chinese ownership row | Business News

The British chip developer Imagination Technologies has asked a former government minister to join its board as it tries to move on from a damaging row over the intentions of its Chinese owner.

Sky News has learnt that Ed Vaizey, who was nominated for a peerage by Boris Johnson last month, is in talks with Imagination about becoming a non-executive director of the Hertfordshire-based company.

Sources said that Mr Vaizey, who stepped down as minister for culture and the digital economy just over four years ago and subsequently gave up his parliamentary seat, had been approached several weeks ago about the role.

The headquarters of technology company Imagination Technologies
Imagination Technologies plays a critical role in the fast-growing internet of things economy

Canyon Bridge Capital Partners, which took control of Imagination in 2017, is itself backed by China Reform Holdings, an investment vehicle with close links to Beijing.

The chip developer plays a critical role in the fast-growing internet of things economy, boasting that its graphics processing units (GPUs) are used in 30% of the world’s mobile phones and, in total, 11bn devices globally.

Imagination was the tenth most prolific UK-based filer of patents in the European Union last year – ahead of Dyson and the chip designer ARM Holdings, which is currently owned by Japan’s SoftBank but which is the subject of talks about a sale to Nvidia of the US.

Earlier this year, Imagination became the subject of a public tussle over its future ownership when Sky News revealed China Reform’s plot to stage a boardroom coup, leading executives to conclude that it wanted to redomicile the company to China.

The bust-up prompted the departure of Imagination’s chief executive, Ron Black, and the launch of probes by parliament’s foreign affairs select committee and the Trump administration in Washington.

In response, Canyon Bridge pledged to keep Imagination headquartered in Britain and told the culture secretary, Oliver Dowden, that it would appoint a slate of independent directors.

Man adding a microchip to circuit board (Library image)

2016: Imagination boss on future tech

The intervention by Washington’s Committee on Foreign Investment in the UK intervention has come two-and-a-half years after it blocked Canyon Bridge’s takeover of Lattice Semiconductors in 2017.

Canyon Bridge retains offices in the US but redomiciled to the Cayman Islands after CFIUS’s intervention in the Lattice deal.

Imagination’s relationship with Apple, which was rekindled in January with a new licensing deal, is expected to be a focal point of CFIUS’s enquiries.

The British company’s sale to Canyon Bridge was approved by the US government subject to its disposal of MIPS, a graphics processing unit operating in the US.

MIPS was sold to Tallwood Venture Capital, a California-based investor, which subsequently combined it with Wave, an artificial intelligence processing business.

Given his network of relationships in Whitehall and the senior ranks of the Conservative Party, the approach to Mr Vaizey is unsurprising.

People close to the situation cautioned, however, that he had not yet concluded whether he would join Imagination’s board.


China and UK relationship ‘seriously damaged’

The move would not come without reputational risks for any new independent directors if China Reform attempts to exert control over Imagination in future, with the involvement of Beijing in Britain’s nuclear, telecoms and technology industries the subject of intensifying debate.

Lord Browne, the former BP chief executive, recently resigned as chairman of Huawei Technologies’ UK board following the government’s decision to exclude it from a role in the UK’s 5G network.

The identity of other prospective non-executives who are in discussions with Imagination was unclear on Thursday.

The row over China Reform’s intentions sparked the resignations of chief executive Ron Black and two other senior executives.

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One of them, Steve Evans, chief product officer, wrote in his resignation letter: “China Reform have clearly set out to take control of the business for reasons best known to themselves, and I will not be part of a company that is effectively controlled by the Chinese government.”

Both he and John Rayfield, chief technical officer, are understood to have rescinded their resignations following assurances about Imagination’s future governance.

Another of the company’s former bosses, Sir Hossein Yassaie, warned the government that China Reform was using “COVID cover” in a bit to seize control of Imagination.

Company executives have hinted that a relisting of the British-based company is an option likely to be explored in the coming years.

Imagination and Mr Vaizey both declined to comment.

Sky News