Two executives at Imagination Technologies, a UK semiconductor design and manufacturing firm, have quit their positions following a postponed boardroom takeover from Chinese investors, Sky News reported citing people familiar with the matter.

Why it matters: The semiconductor firm is one of the UK’s most prolific tech assets with over 30 years worth of patents. UK Members of Parliament got involved due to the company’s business and strategic importance to the UK.

  • In 2017, Imagination Technologies shares plunged after Apple announced it would no longer use its products. A Cayman Islands private equity firm called Canyon Bridge acquired the firm for £550 million ($688 million) in the same year. A Chinese state-owned fund, China Reform Holdings, is the investor’s main backer.
  • The venture capital firm behind Canyon Bridge wants to redomicile Imagination Technologies to China, bringing all its intellectual property along, Sky News said.
  • Executives worried that the move would hinder the company’s ability to do business in the US, including their star client, Apple.

Read more: Imagination Technologies: What’s at stake in the fight over control

Details: The two executives, Steve Evans, Chief Product Officer, and John Rayfield, Chief Technical Officer could change their minds. But only if they are assured that the “proposed change of control” does not take place, Sky News said.

  • Evans refuses to be part of a company that is “effectively controlled by the Chinese government,” the news channel said.
  • The takeover was cancelled, but the chief executives seem to think that it was merely postponed. They haven’t seen enough “assurances” the control of the company will not be moved to China.
  • The company’s Chief Executive Officer, Ron Black, resigned on Friday.
  • The interim Chief Executive and Executive Chairman of the firm, Ray Bingham, is trying to convince the two C-level executives to stay. Bingham happens to be a co-founder and partner of the Canyon Bridge private equity firm.

Context: Last week, Imagination Technologies would have discussed the appointment of four representatives of state-owned China Reform Holdings as directors in an emergency meeting.

  • After a campaign from prominent Conservative MPs, the UK’s culture secretary called Imagination Technologies and asked for an urgent meeting with Bingham. The emergency meeting was then cancelled.
  • A few days after the takeover was put to bed, the Trump administration decided to investigate the matter. The Committee on Foreign Investment in the US (CFIUS) wants to find out if there is a risk of US-made tech being moved to China. Imagination Technologies had acquired a US company that designs artificial intelligence chips prior to the Canyon Bridge acquisition.
  • The UK government is seeking increased powers to stop mergers and acquisitions that could threaten British national interests, Sky News reported.
  • The timing of the takeover seems perfect. In January, Imagination Technologies rekindled its relationship with Apple in a new deal. The agreement gives Apple “access to a wider range of Imagination’s intellectual property in exchange for licensing fees.”
  • One person told Sky News that the timing was to ensure that British authorities were distracted by the Covid-19 pandemic.
  • About 30% of the world’s mobile phones, or 11 billion devices, and 40% of cars use Imagination Technologies’ graphics chips, Sky News said.

Eliza was TechNode's blockchain and fintech reporter until July 2021, when she moved to CoinDesk to cover crypto in Asia. Get in touch with her via email or Twitter.