“China’s economic (and national) security is at risk,” the document warns. “The stakes for China are high, and trust is low. China must therefore redouble efforts at ‘zili gengsheng’ (self-reliance).”
The text reads as if it could come out of the People’s Daily, the official mouthpiece of the Chinese Communist Party. In fact, it featured in a business plan produced by a British technology company.
It was the summer of 2019 and Imagination Technologies, a Hertfordshire microchip company best known for designing the iPhone’s graphics chips, was turning its attention to China.
With Donald Trump’s trade war against Beijing picking up steam, UK-based Imagination saw an opportunity to forge a “partnership” with the country as US suppliers were frozen out.
“Imagination is uniquely poised to take advantage of China’s ambition to become a leading semiconductor power,” the business plan reads. “[China] has holes in its assets and capabilities today; many of these holes are Imagination-shaped holes.”
In a separate strategy document, Imagination said more technology should be researched and developed “in partnership with the Chinese government and Chinese partners”.
However, it did not take long for Imagination’s ties with the Far East to spark a political storm, as an attempted boardroom “coup” forced the UK Government to intervene.
Oliver Dowden, the then digital secretary, raised “serious concerns” about a plan to install four directors from China Reform, a state-owned investor, on Imagination’s board.
It came amid growing fears about how Chinese technology companies such as Huawei were infiltrating the West.
However, documents reviewed by The Telegraph show that long before the failed power grab, executives had long been seeking to develop stronger links between Imagination – one of Britain’s most advanced semiconductor companies – and China.
The disclosures raise new questions about Theresa May’s government’s decision to allow the 2017 sale of Imagination to Canyon Bridge, a private equity firm largely financed by China Reform.
The documents show that executives including Ron Black, the company’s then chief executive, pursued $300m (£237m) investment from THG, a Chinese private equity firm.
Not only would this have meant the company relocating to China but it would also have paved the way for Beijing representatives to be appointed to its board.
The plan would also involve setting up research and development (R&D) hubs in China.
In one email Black also appeared open to doing deals with Huawei, even after it had been singled out by Washington as a threat.
‘James Bond fantasy’
The documents have emerged as part of an unfair dismissal case brought by Black, who claims he was sacked for blowing the whistle on China’s attempt to take over the company.
In April 2020, Black explosively quit the company over the plan to add the four directors. It was after executives leaked the plan to the media that the UK intervened – forcing the takeover to be aborted at late notice.
Black is now suing the company for $257m in an employment tribunal case. During hearings that wrapped up last week, Black said that he was offered what he said felt like a “bribe” to move Imagination to China, arguing that he quit over a plan to “effectively transfer [Imagination] to the Chinese government”.
Lawyers for Black claimed clandestine emails between investors and a Chinese employee revealed plans to “bring in” intellectual property “for the party [and] for China”.
Imagination, meanwhile, argues that Black was in fact the architect of the company’s push towards China, as he advocated for the $300m investment.
The company claims that Black ultimately torpedoed China Reform’s board takeover, not because he was protecting sensitive technology from Beijing but because he had fallen out with the investors.
While giving evidence Black said he had fought attempts for the company to fall into Chinese hands and that his whistleblowing helped prevent that.
Imagination claims he only turned into a crusader for protecting British technology when it became in his interest to do so.
Andrew Burns, Imagination’s barrister, said on Tuesday that Black had concocted a “James Bond fantasy”. The tribunal is due to hand down its ruling later this year.
Back to Britain
Regardless of who pushed for closer links with China, those plans now appear dead in the water.
While Imagination remains owned by Chinese-backed investors, the company has remained headquartered in Britain and has appointed British and French directors.
These include Sir Peter Bonfield, the former BT boss, as well as a UK chief executive in Simon Beresford-Wylie, the former Arqiva boss.
Meanwhile, THG, the investment group that proposed moving the company to China, ultimately got cold feet, with Britain also toughening up export controls.
The Telegraph understands that Black’s allegations about a Chinese takeover prompted a security review of the company in Britain, which found its technology was not sensitive enough to require export controls.
Last year, The Telegraph reported that the company had confidentially filed for a US stock market listing, though plans are not believed to be imminent.
All of the recent developments signal how Imagination has swung back to the West.
However, it does not disguise how one of Britain’s most prominent tech companies came close to falling within China’s grasp.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
