A state-controlled Chinese investor is trying to seize control of Imagination Technologies Group, the British chip designer – sparking fears that its prized intellectual property assets could disappear from the UK.

Sky News can exclusively reveal that Imagination, which was taken over in 2017 in a £550m deal, has scheduled an emergency board meeting next week to discuss the appointment of four representatives of China Reform Holdings as directors.

Senior MPs, including the chairs of four Commons select committees, have been alerted to the move, and are this weekend planning to urge Boris Johnson to intervene on the grounds of potential risks to national security.

The government intelligence agency, GCHQ, and the National Cyber Security Centre have also been informed of the developments, according to Westminster insiders.

Imagination makes graphics processing units (GPUs) for customers including Apple and Samsung, and is one of the UK's most important technology companies.


Its designs are used in 30% of the world's mobile phones and 40% of automotive GPUs.

Customers in the car industry include Audi, Hyundai and Toyota.

The company boasts that products based on its intellectual property are "used by billions of people across the globe in their phones, cars, homes, and workplaces".

In total, its designs are present in more products than there are people on Earth, making it a vital player in the rapidly expanding 'internet of things'.

Imagination, which is headquartered in Hertfordshire, is directly owned by Canyon Bridge Capital Partners, a Cayman Islands-based private equity firm.

Canyon Bridge's main investor is China Reform Holdings, which is one of thousands of Chinese state-owned enterprises and has links to Beijing's State Council, the country's top decision-making body.

Sources in Westminster said on Saturday that senior Imagination executives were understood to be "deeply concerned" about the impending boardroom takeover and its implications.

One said that China Reform had indicated to the company that it ultimately wanted to redomicile it to China - a move that would have inevitable consequences for hundreds of important British technology jobs.

It would compound deepening fears about the pace of the 'technology transfer' to the world's most populous nation at a time when the coronavirus pandemic is stoking fresh international enmity towards China and raising renewed questions about globalisation.

One source said that China Reform's move appeared to be timed to coincide with "the point of maximum distraction" for ministers, with governments around the world almost entirely consumed by the task of dealing with COVID-19.

Imagination employs roughly 650 people in Britain, and 900 in total around the world.

It was the tenth 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.

The relationship between Imagination and Apple, which resulted in a new licensing deal being struck in January, means that senior figures in the Trump administration might also raise questions about a Chinese takeover of the UK company's board.

One source pointed to the backdrop of the fluctuating US-China trade war, suggesting that it would help solidify opposition in Washington to such a move.

In 2017, America's powerful Committee on Foreign Investment in the United States (CFIUS) blocked a takeover by Canyon Bridge of Lattice Semiconductor following an executive order from President Trump.

In the wake of that decision, Canyon Bridge relocated its head office from the US to the light-touch Cayman Islands.

The emergency board meeting to nominate four China Reform officials as Imagination directors is expected to be held on Tuesday.

It was unclear this weekend whether Imagination executives, including the CEO Ron Black, a semiconductor industry veteran, had been consulted on the move.

Senior MPs, including Tom Tugendhat, who chairs the foreign affairs committee, have written to the prime minister to urge an assessment by GCHQ of the national security implications of the impending board changes.

In a joint letter from the chairs of four Commons committees - business, energy and industrial strategy; digital, culture, media and sport; defence and foreign affairs - the MPs this weekend urged Mr Johnson to contact Imagination executives and CFIUS to obtain more information about China Reform.

"They want assurances that Imagination Technologies will remain a UK-based company that is able to continue its operations and innovations here," said one person familiar with their letter.

Mr Tugendhat told Sky News: "Technology transfer out of the UK is costing us - not only in lost jobs, but lost seedbeds of innovation.

"We've been so busy taking back control from Brussels we seem not to have noticed how fast our companies and technologies are falling into the grasp of other nations."

Imagination is said to be taking legal advice on whether the boardroom coup can be prevented.

The situation is erupting amid ongoing criticism of the government's decision to allow Huawei, the Chinese telecoms equipment manufacturer, a role in the construction of Britain's 5G network.

Huawei's insistence that it is a private company, with no control exerted by Beijing, has continued to draw a sceptical response from the likes of Sir Iain Duncan Smith, the former Conservative leader.

Last weekend, Sir Iain wrote in the Mail on Sunday that China's trading partners would need to rethink their relationship with the country once the world had got to grips with the coronavirus outbreak.

"For too long, nations have lamely kow-towed to China in the desperate hope of winning trade deals," he wrote.

"But once we get clear of this terrible pandemic, it is imperative that we all rethink that relationship and put it on a much more balanced and honest basis.'

Since the 2016 Brexit referendum, the government has sought to strengthen the regime around foreign takeovers of UK companies.

Theresa May's administration introduced a tougher national security test for buyers of assets in areas such as technology, requiring buyers to notify the government of any potential issues.

The tightening of the rules came in the wake of SoftBank's £24bn takeover of ARM Holdings in 2016.

Since then, ministers have forced Melrose Industries and Advent International to make binding commitments about their stewardship of the industrial groups GKN Holdings and Cobham respectively.

However, they elected not to intervene in Canyon Bridge's takeover of Imagination.

"We have been encouraged that the focus of the UK government has and continues to be one of welcoming this type of investment . . . that will help accelerate success," Ray Bingham, a partner at Canyon Bridge, said in 2017.

"They certainly asked about UK headquarters, UK jobs, UK R&D in particular . . . Our focus is about creating and building on the rich technology resources that are right here [in the UK]."

Imagination declined to comment on Saturday, while neither Canyon Bridge or China Reform Holdings could be reached for comment.