Is Imagination Technologies for sale again?

Graphics chip designer Imagination Technologies is up for grabs again. A Bloomberg report claims that Canyon Bridge Capital Partners, the private equity firm with ties to Chinese state investors, has hired Lazard Inc. to seek a buyer for the Hertfordshire, U.K.-based chip designer.

Imagination, once a promising graphics technology outfit, could never recover after the Apple fiasco and the perception of Chinese ownership. According to media reports, Apple, which owned an 8.1% stake in Imagination, considered buying the British chip designer in 2016. However, after failing to agree on Imagination’s valuation, Apple left the negotiating table and announced that it would start developing its own graphics IP.

Apple contributed to nearly half of Imagination’s sale, sending shock waves at the British chip company at that time. The company’s stock fell by 70%, and in 2017, Canyon Bridge, backed by state-owned China Reform, acquired Imagination for $686 million. Soon after, Imagination began shedding its non-core businesses; for instance, it sold its connectivity business Ensigma comprising Wi-Fi and Bluetooth silicon to Nordic Semiconductor.

Next came the issue of China gaining access to key semiconductor technology. The effort to appoint new board members and Imagination’s listing in Shanghai proved hot potatoes, leading to intervention from the U.K. regulators to ensure that Imagination remains a U.K.-headquartered business. The company has been in distress since then.

Figure 1 Imagination has more than 3,500 patents related to graphics and related technologies.

Its CEO, Simon Beresford-Wylie, has denied a recent Daily Telegraph report that he’s stepping down. He also rejected some reports about the company engaging in illicit transfers of technology to China. Earlier, in November 2023, Reuters reported that Imagination was laying off 20% of its staff.

With this backdrop, let’s go back to Imagination on the selling block. The Bloomberg report has named Alphabet Inc.’s Google, MediaTek, Renesas, and Texas Instruments as Imagination’s key clients. But no suitors have been reported in trade media yet.

Imagination owners are pinning their hopes on two major factors. First, they draw their hopes from Nvidia’s runaway success in the graphics realm. Though Nvidia’s GPUs are targeted at entirely different markets such as data centers and scientific computing. Imagination, on the other hand, mainly offers graphic solutions for lower-power markets such as automotive, PC cards, drones, robotics, and smartphones.

Second, like Nvidia, Imagination aims to bolster its standing by incorporating artificial intelligence (AI) content in its graphics IP offerings. The British chip firm plans to turn its graphics IP into AI accelerators for low-power training and inference applications.

Figure 2 Imagination is aiming to bring graphics-centric AI to battery-powered devices like drones and smartphones.

Imagination, founded in 1985, has come a long way in its 40-year long technology journey. Once seen as a jewel in Britain’s technology crown, it’s now facing the paradox of a struggling company with a highly promising technology. Perhaps its new owner could address that paradox and put the graphics design house in order.

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