The company's Chinese investors might want it to move its HQ to China. The UK government is said to be evaluating a possible response...
Speculation is rife about the future of Imagination Technologies, after weekend reports suggesting that the graphics and communications processor intellectual property (IP) company, headquartered in the U.K. but owned by Chinese investors, was on the brink of being moved to China.
A Sky News report said that Imagination would hold an emergency board meeting this week to discuss appointing four directors representing China Reform Holdings.
China Reform is the limited partner of Canyon Bridge, which came to Imagination Technologies’ rescue in November 2017 by acquiring it for £550 million (around $700 million). The UK’s Companies House web site indicates the current board has four directors, representing Imagination and Canyon Bridge: Ron Black, Ray Bingham, Peter Kuo and John Kao.
According to Sky News, senior members of parliament in the UK have raised concerns about national security if the Chinese appointments are made and there is an eventual shift of the company’s IP to China, much in the same way as Arm was forced to in order to be able to license its technology locally in China. At the time, in 2018, Arm established a joint venture in China and transferred its IP there stating: “Chinese organizations prefer to acquire technologies that have been fully developed by Chinese companies with this JV’s establishment, which will enable Arm-based semiconductor intellectual property to be tailored for the Chinese domestic ecosystem and makes a broader portfolio of technology accessible to Chinese partners for China market needs.”
So, is Imagination Technologies going to go the same way?
We asked Imagination CMO David Harold whether indeed an emergency board meeting to address this was taking place, to which he said, “I saw the story but I’m not in a position to confirm if it was correct.” He added, ““The board of Imagination Technologies is considering a number of strategic options in order to continue the transformation and growth of the business around the world. This includes possible changes to the operational, governance and investment structure of the company. Any changes will be compliant with relevant laws and regulations of the UK and other countries in which the company operates. Similarly, any changes will benefit the company’s headquarters and global business development. These discussions are still ongoing, and our priority remains our customers and staff.”
Earlier this year, Imagination got back into Apple with a new multi-year license agreement under which Apple has access to a wider range of Imagination’s intellectual property in exchange for license fees. This was a big coup for Imagination CEO Ron Black, given that the company’s troubles in 2017 that required Canyon Bridge’s intervention was in a large part due to Apple publicly stating it was designing Imagination out of its products.
We spoke to Ron Black a few days after this statement at CES 2020 in Las Vegas, when he told EE Times, “We see China as a very big area. We’re investing heavily in China to grow, both in an R&D standpoint and commercial customer support across all of the product lines.”
We specifically asked then if he would see them having to go the same way as Arm and SiFive in setting up trading entities in China. His response? “We’ve always just had a China headquarters there. So, it’s not a separate entity. I don’t really think that that’s the appropriate way to set it up. In fact, several customers have told us they prefer it not to be that way. Because you don’t want to have two independent companies trying to accomplish the same thing. You really want to bring the full bulk of the company. There’s a lot of autonomy in the regions, but we really put the whole company behind it.”
If there is the board meeting as reported, and there is every reason to believe there is, then we may indeed see some changes in operational, governance and investment structure of Imagination Technologies as the company statement suggests. It would be very difficult not to, given that the Chinese owner probably would want to exercise its influence.