Published 17/12/2024
UK-China Transparency has published a research paper on Imagination Technologies, one of the UK’s most significant semiconductor industry companies. This paper is Part One of a two-part report.
The report’s executive summary reads as follows:
<< Imagination Technologies (‘Imagination’) is a British microchip design company that specialises in graphics processing unit (GPU) design. GPU design innovations are essential for the development of chips suitable for advanced artificial intelligence (AI) functions. At its stock market peak in 2012, the company was valued at over £2 billion. Imagination remains Britain’s second-biggest chip company.
In 2017, Canyon Bridge, a private equity firm, purchased Imagination for roughly £550m. At the time, Canyon Bridge had been blacklisted by the United States government for national security reasons. Canyon Bridge’s main funder is a company controlled by China Reform, an arm of the Chinese government, meaning that Imagination is effectively owned by the Chinese government.
In 2020, a row broke out over China Reform’s attempt to take over Imagination’s board. The plan was ditched, but several of Imagination’s senior executives left the company afterwards, citing fears about Chinese government control and the direction of the company.
UK-China Transparency (UKCT) has analysed a range of evidence to ascertain more about Imagination and China. We have conducted original open-source research in English and Mandarin, consulted Chinese corporate records, and interviewed an individual who worked in a senior role at Imagination after 2020.
Key findings are as follows:
- Transferal of core assets to Chinese companies: UKCT has received testimony alleging that in 2020 Imagination began to transfer core assets to Chinese GPU companies through undisclosed and unusual knowledge and technology transfer deals. Of the three Chinese companies identified as having received Imagination’s assets: one, Moore Threads, has links to a company that supplies GPU products to the Chinese military; another, Biren Technology, is part-owned by the Russian government. These two companies have been described as China’s “premier AI chip designers” and both were sanctioned by the US government in October 2023.
- Chinese owners closely tied to military: Imagination’s owner, China Reform, focuses on supporting China’s strategic industries and has close links to China’s military and national security establishment as well as investment in related industries and companies, including a chip company that has supplied a leading military company. UKCT assesses that China Reform has intended to instrumentalise Imagination in pursuit of the interests of the Chinese Communist Party (CCP).
- UK staffing cuts: Imagination has laid off hundreds of staff since 2017, according to its annual reports. Further planned cuts of up to 20% of staff were reported in the media late in 2023. Imagination has yet to publish its annual report for 2024.
- Global Counsel’s involvement: Lord Peter Mandelson met with China Reform in late 2019. In early 2020, Global Counsel, an advisory firm founded and partly owned by Mandelson, provided strategic advice to Canyon Bridge in relation to the row about Chinese government control. In 2020, whilst Global Counsel worked to help Canyon Bridge “reassure UK stakeholders” about Imagination, Mandelson himself was simultaneously president of the Great Britain China Centre, a public body funded by the Foreign Office. It has been alleged in court that one of Global Counsel’s staff working on Imagination had also worked on Imagination within government, whilst a special advisor to Prime Minister Theresa May in 2017.
Imagination told UKCT in advance of publication that it rejects allegations that it has transferred its core assets to Chinese customers.
Global Counsel deny working for China Reform, stating that their client was Canyon Bridge. Global Counsel told UKCT that Mandelson has not worked on Imagination for Global Counsel and that his meeting with China Reform in 2019 was a coincidence. >>
Anyone interested in this case should email [email protected]
UKCT continues to investigate these matters. Part Two of this series will examine matters related to export
control and other legislation, as well as evidence that has come to light through an employment dispute between Imagination and Dr Ron Black, the company’s CEO in 2019-2020.