GCHQ and NCSC alerted over Imagination Technologies Chinese takeover

The British manufacturer holds emergency talks over the proposed appointment of board members from China Reform Holding

semiconductor chip

The UK’s most prominent national security agencies have been put on alert over the proposed takeover of chip manufacturer Imagination Technologies by a Chinese state-owned company.

Imagination has been approached by China Reform Holding and is holding an emergency meeting this week which could see control handed over to the Chinese firm through the appointment of four directors to the company’s board.

Any transfer of power could see the firm’s intellectual property (IP) and patents also exfiltrated from the UK.

GCHQ and the National Cyber Security Centre (NCSC) are being kept in the loop over developments, while senior MPs have penned a letter to the prime minister urging him to intervene, according to Sky News.

The joint letter, written by four senior MPs who chair prominent select committees, has urged Boris Johnson to ask GCHQ to assess the security implications of any company board changes.

The MPs also want assurances that Imagination will still operate as a British and UK-based company. The four MPs chair the business, energy and industrial strategy; digital, culture, media and sport; defence, and foreign affairs select committees. 

The company is based in Hertfordshire, England and is owned by Canyon Bridge Capital Partners, a private equity firm itself based in the Cayman Islands. Canyon Bridge’s main investor, in turn, is the company keen on taking over Imagination Technologies, China Reform Holdings.

Imagination is known for supplying graphical processing units (GPUs) for a host of prominent smartphone manufacturers including Apple and Samsung and is regarded as a key player in the wider technology supply chain. The firm also has customers in the automotive industry including Audi and Toyota.

Its relationship with Apple has fluctuated heavily over the last few years and even broke down in 2017 when the US firm dropped Imagination as one of its main suppliers. The two companies have since mended their relationship, with Imagination agreeing a new deal with Apple at the beginning of the year.

Many politicians are also drawing parallels between the escalating situation, and the government’s handling of Huawei. Boris Johnson’s government granted the Chinese telecoms giant a “limited” role in building out Britain’s 5G infrastructure earlier this year, to the ire of many who felt the Chinese company should be left out entirely.

IT Pro approached Imagination Technologies, GCHQ, NCSC and the government for further information around the deal.

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