The Chinese owners of Imagination Technologies, one of the UK’s leading microchip companies, have abandoned a $1 billion sale process after the business was caught in the middle of Donald Trump’s trade war.
Accounts for Imagination, which has its head office in Hertfordshire, show it made a pre-tax loss of $51 million (£38 million) last year as its revenues plunged by 30 per cent to $108 million. The annual report, signed off in June but published last week, indicated that the company was on course to breach loan covenants and that its future was facing “material uncertainty”.
In a statement this weekend, an Imagination spokesperson said that “trading conditions have since improved” and bosses, led by new chief executive Didier Lamouche, “remain confident about the financial health and future prospects of the company, which has continued to remain in compliance with all revenue and liquidity covenants”.
They also said that the company retained the “full support” of its owner, the US-based, Chinese-owned investment group Canyon Bridge, which would “provide additional funds should they be required”.
The spokesperson confirmed that Canyon Bridge had been looking to sell Imagination during the summer, before “poor market conditions” made it withdraw from the process.
As a China-backed, UK-based company that makes most of its money from US sales, Imagination is highly exposed to President Trump’s global tariff war and his desire to distance America’s tech sector from Beijing.
• Trump tariffs are taking their toll on America by stealth
Imagination designs and sells intellectual property that is used by technology companies to make microchips. Its customers are reported to include Google and Apple. Other customers, such as Texas Instruments, use its technology in chips to make in-car electronics.
It is not clear how exactly Imagination’s business will be affected, but its accounts note that tariffs “may create volatility” in its intellectual property sales.
Canyon Bridge bought Imagination off the London Stock Exchange for £550 million in 2017. The deal was waved through but later attracted a political storm after Imagination’s then-chief executive, Ron Black, blew the whistle on an attempted boardroom takeover by the Chinese investors.
• MPs to question Imagination Technologies executives over Chinese involvement in chip maker
In the years since Canyon Bridge’s takeover, it has reportedly considered relisting it in London, and also looked at floats in China and the US before appointing Lazard to find a buyer this year.