Imagination Technologies announced on Tuesday that it had hired the former co-president of China’s Tsinghua Unigroup to replace its current chief executive Andrew Heath. The hiring is the first major change by the Imagination's new ownership, Canyon Bridge, an investment firm backed by a series of Chinese funds and investors with ties to the government.
The new chief executive, Leo Li, inherits a battered and bruised business. Last year, Imagination admitted that Apple, its largest customer by far, would phase out Imagination’s graphics technology from its smartphones, tablets and other gadgets. Losing Apple would disembowel Imagination, whose stock plunged more than 60 percent after the announcement.
In September, Canyon Bridge acquired Imagination, which licenses graphics and video processing technology to other companies, for $742.5 million. Ray Bingham, the former chief executive of Cadence Design Systems and one of Canyon Bridge’s founders, said that Imagination would focus on expanding the market for its graphics chips, which can be used to accelerate artificial intelligence algorithms, into China.
That should remain the priority for the company under Li’s leadership. He was previously chairman and chief executive of the Shanghai, China-based Spreadtrum Communications, which develops 3G and 4G chips for smartphones and other consumer electronics. Tsinghua acquired Spreadtrum for about $1.8 billion in 2013, and Li was promoted to co-president in November.
“I have paid close attention to Imagination over the years,” Li said in a statement. “We have a strong strategy today to evolve the company to the next level of success by capitalizing on the opportunities in other markets, particularly China, one of the largest semiconductor markets in the world. We will have a renewed focus on technology innovation through strengthening our R&D capabilities."
Tsinghua, funded by Beijing’s Tsinghua University and owned by the Chinese government, is considered one of the country’s national champions in the global chip industry. The company has aggressively targeted the memory chip market, offering billions of dollars in an ultimately unsuccessful bid to acquire Micron Technology, the last major American maker of DRAM.
The Chinese government has pumped more than $100 billion to significantly boost the nation's chip production. As the Trump administration weighs $60 billion of tariffs on Chinese electronics and other products as retaliation for technology transfers, Chinese officials have announced tax breaks for firms making semiconductors in the country.
The Chinese government has reportedly offered to buy more American chips as part of trade negotiations with the United States.