Imagination Technologies, a top UK semiconductor company acquired by a state-backed Chinese fund, ranks a listing on the Shanghai stock exchange’s tech board as its top option once it is ready to float shares, according to Reuters.
Why it matters: The chip design company is at the center of a geopolitical storm between China, the UK, and the US.
- In the beginning of April, the UK government intervened in an attempted boardroom takeover that they saw as leading to the transfer of key technological intellectual property to China.
- The private equity firm that bought Imagination Technologies in 2017, Canyon Bridge, is backed by Chinese state-backed venture capital firm China Reform Holdings.
Details: The UK chipmaker’s financials have been in a bad state for a while now, recording an operating loss of $23 million in 2019, a Reuters source said. An initial public offering is a few years down the line, according to the report.
- The Nasdaq-style tech board at the Shanghai stock exchange is a “top option,” the report said citing a source with knowledge of the matter.
- “There is an enthusiasm towards semiconductor companies in China, with the STAR Market. Many semiconductor companies have listed there and valuations have been attractive,” the source told Reuters.
- The focus is to save the business, not re-domicile it in China, Reuters’s sources said.
Context: The boardroom takeover was cancelled after intervention from prominent conservative members of the UK Parliament.
- With more than 30 years worth of patents, the company is one of the UK’s most valuable strategic tech assets.
- Imagination Technologies’ CEO, CTO, and CPO all quit after the attempted boardroom takeover by Canyon Bridge.
- About 11 billion devices or 30% of the world’s mobile phones, as well as 40% of cars use graphics chips developed by Imagination Technologies, Sky News said.
- The semiconductor designer’s shares fell in 2017 after it lost Apple, its biggest client. Cayman Islands-based Canyon Bridge swooped in to buy it for £550 million ($688 million).
- In January 2020, the Financial Times reported that the firm would be selling to Apple again.
- The STAR Market launched last year to attract more IPOs from tech companies in China. The tech board has relaxed listing rules relative to other exchanges in the country.
- At least five top semiconductor companies were reportedly accelerating plans to publicly list on the tech board in response to Beijing’s push for technological self-reliance.