Imagination exec’s exit threatens to reignite China row

A top executive at Imagination Technologies has quit in a move that threatens to reignite a row about its Chinese ownership even as a series of pledges about its British headquarters and board members appeared to have defused it.

Sky News has learnt that John Rayfield, the Hertfordshire-based chip developer’s chief technical officer, has resigned after initially being persuaded to remain with the business during the spring.

Sources said that Mr Rayfield had left Imagination in recent weeks, at around the same time that the company was lining up Simon Beresford-Wylie as its new chief executive.

Image: Simon Beresford-Wylie

Mr Beresford-Wylie, a respected executive from the telecoms infrastructure industry, was confirmed in the role this week.

The departure of Mr Rayfield may be significant because he originally quit in April alongside Steve Evans, chief product officer, who wrote in his resignation letter that “China Reform [Holdings, the principal investor in Imagination’s direct shareholder] have clearly set out to take control of the business for reasons best known to themselves, and I will not be part of a company that is effectively controlled by the Chinese government”.

One insider said that Mr Rayfield had left because of a “breakdown in trust” with Canyon Bridge Capital Partners, which bought Imagination in 2017, although the underlying reasons behind that were unclear on Wednesday.

A plot to appoint four China Reform nominees to Imagination’s board – exposed by Sky News earlier this year – sparked alarm inside the company and in Whitehall, where the foreign affairs select committee of MPs launched an inquiry into “foreign asset-stripping of UK companies”.

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Ron Black, who stepped down as Imagination’s chief executive because of his disquiet at China Reform’s plans, was said to have anticipated an attempt by the state-backed vehicle to redomicile the British technology company to China.

Imagination declined to comment on Wednesday, while Mr Rayfield could not be reached for comment.

His biography has been removed from the company’s website, and sources close to Imagination confirmed his departure.

The debate about China Reform’s intentions has come at a sensitive time for UK-China relations, with the recent ban on Huawei’s involvement in Britain’s 5G network threatening to sour economic and diplomatic ties between the two countries.

Ministers are close to unveiling a new national security and investment bill that will tighten the rules relating to overseas investors’ ability to acquire control of British companies and assets.

The recently announced $40bn takeover of chip designer ARM Holdings by Nvidia of the US has also intensified scrutiny about the ownership of UK-based technology champions.

In a bid to appease parliamentarians, Canyon Bridge recently announced the appointment of Sir Peter Bonfield, the former chief executive of BT Group, as a non-executive director of Imagination.

The private equity firm is also trying to recruit Ed Vaizey, the former culture minister, to join the company’s board.

Canyon Bridge has dismissed as fanciful the suggestion of any malign intent or plan to shift Imagination’s intellectual property to China.

Nevertheless, Mr Rayfield’s resignation will throw a renewed political spotlight on the chip developer, which counts Apple among its biggest customers.

TOPSHOT - Apple CEO Tim Cook speaks on-stage during a product launch event at Apple's headquarters in Cupertino, California on September 10, 2019. - Apple unveiled its iPhone 11 models Tuesday, touting upgraded, ultra-wide cameras as it updated its popular smartphone lineup and cut its entry price to $699. (Photo by Josh Edelson / AFP) (Photo by JOSH EDELSON/AFP via Getty Images)

Image: Apple is among Imagination’s customer base

Ray Bingham, Imagination’s chairman and a partner at Canyon Bridge, met Oliver Dowden, the culture secretary, earlier this year, and pledged to maintain the chip developer’s status as a UK-headquartered business.

Another of the company’s former bosses, Sir Hossein Yassaie, warned, however, the government that China Reform was using “COVID cover” in a bit to seize control of Imagination.

Sky News revealed earlier this year that the Trump administration had also begun investigating the situation.

Imagination boasts that its graphics processing units (GPUs) are used in 30% of the world’s mobile phones and, in total, 11 billion devices globally.

It was the 10th-most prolific UK-based filer of patents in the European Union last year – ahead of Dyson and the chip designer ARM Holdings, which is owned by Japan’s SoftBank.