Imagination’s saga is being spun at least four different ways, as those with different agendas and vested interests attempt to control the perception of what is happening with the company. Here’s the essence of each of those views:
1.
China is trying to exert additional control over Imagination. That is not good for the UK’s economy. There’s an increased risk that employment and/or IP development will be moved from the U.K.
2. Imagination is already controlled by China. Little will change.
Chinese financiers already own Imagination through investment company Canyon Bridge, whose key backer is China Reform. China Reform is a $30 billion venture fund controlled by the Chinese government.
3. Imagination, “for its foreseeable future,” will
keep its head office in the U.K. “IP moves around the world by licensing it.” So, what’s your problem?
4. Former CEO Ron Black recently left Imagination not because of China’s growing control over the company, but because he couldn’t save the company from a deep financial trouble the company was already in.
Based on many conversations and reports over the last couple of weeks, it’s becoming clear that this is not an ownership or political issue as is being made out in the UK media. It’s much more fundamental: that of Imagination’s survival. I was waiting for some piece of evidence before writing this article, and it came in the form of
a Reuters report this week that highlighted Imagination’s precarious financial position: it was significantly loss-making with an adjusted annual operating loss of $23 million in 2019 under Black’s leadership (Black resigned earlier this month). Our own sources also suggest a similar figure, indicating that Black was running out of options for the company, and he turned the issue into a political one as his parting shot.
Hence our thoughts so far on the situation are as follows: Imagination Technologies’ financial performance caused concern among its owner investors and prompted them to look at ways of stemming the losses. Part of that would mean adding better governance and control on current management, which would also help control costs. Meanwhile, the CEO needed to look at ways of re-inventing the company and was probably pursuing significant additional investment to develop new RISC-V products.
But the only way investors potentially wanting to invest in a loss-making company would probably have been Chinese investors, since there would be a demand for development of new IP locally. However, the additional governance that the owners needed worried management, believing it would mean Chinese control, without realizing Chinese funds already own the company. Hence, they make a political play of it.
My last day was last friday, but there's still a lot of great people and exciting technology! I'm confident they'll be very successful so long as they can retain enough of their key engineers... It's an open question whether the new owners will be able to improve financial compensastion (and morale) enough to do so. I hope they will.
