British chipmaker backed by Beijing hit by China tariff row
A crackdown on exports of advanced microchips to China has dealt a blow to one of Britain’s biggest semiconductor companies.
Imagination Technologies, which develops powerful graphics processors and is owned by Beijing-backed investors, said in its annual report that “US and UK export controls” on its Chinese customers had “stymied topline revenue growth”.
Revenues increased by 3.6pc at Imagination to £124.6m, however its pre-tax profits plunged by 27pc to £13m, in the year ending December 2023.
Imagination, which is headquartered in Hertfordshire, said it had mitigated the impact of weaker than expected revenues with “cost control actions”, including laying off 20pc of its workforce last year.
Imagination is also understood to have cut dozens more roles in recent weeks as part of a further restructuring.
A spokesman said the company had withdrawn from developing central processing unit (CPU) technology, shifting more investment into graphics and artificial intelligence.
“With this investment we were able to retain many of our former CPU team, keeping any resulting redundancies to under 5pc of our organisation,” the spokesman said.
Imagination designs microchip technology, specialising in graphics technology, used in billions of devices including smartphones, cars and data centres. Graphics processors have also proved integral to powering artificial intelligence (AI) software.
The British technology company, which supplies semiconductor technology to companies including Apple, is currently owned by investment firm Canyon Bridge, which is linked to the Chinese state.
Canyon Bridge’s sole shareholder is China Reform, which in turn is backed by Beijing. The fund bought Imagination in 2017 for £550m.
Its ties to China have proved controversial. In 2020, the company was gripped by a boardroom row after China Reform attempted to take control of the company, before an intervention by MPs halted the effort.
The semiconductor industry has been forced to grapple with ever more stringent trade rules as the US tries to block China from accessing advanced microchip technology, which it fears could be put to military use.
These export rules have complicated the sale of many types of semiconductor to China and blocked some entirely.
An Imagination Technologies spokesman said: “As with any globally diverse organisation doing business in China, current geopolitical tensions and the resulting export regimes weigh on the opportunity to drive revenue.”