Chinese engineers developing chips for artificial intelligence that can be used in “advanced weapons systems” have gained access to cutting-edge UK technology, the Guardian can reveal.
Described by analysts as “China’s premier AI chip designers”, Moore Threads and Biren Technology are subject to US export restrictions over their development of chips that “can be used to provide artificial intelligence capabilities to further development of weapons of mass destruction, advanced weapons systems and hi-tech surveillance applications that create national security concerns”.
However, prior to the US blacklisting in 2023, the two companies secured extensive licences with the UK-based Imagination Technologies, which is among a handful of firms worldwide that design an advanced type of microchip crucial for AI systems, and is regarded as a jewel of the UK’s technology industry.
A spokesperson for Imagination said: “At no stage has Imagination (or its owners) considered or implemented transactions with third parties with the aim of enabling China or any other nation state to use or direct Imagination technology for state or military end uses.”
While Imagination’s representatives confirmed the existence of the licences with Moore Threads and Biren Technology, they denied claims that the company, under the ownership of a private equity fund backed with Chinese state money, sought to deliberately transfer its state-of-the-art secrets to China.
Two former senior Imagination insiders claim that “knowledge transfer programmes” accompanying the licences were so comprehensive that they risked the Chinese companies learning how to replicate Imagination’s expertise. One believed that the information provided meant Imagination may “have given [the Chinese companies] the capability to make the technology”.
Both insiders left the company before the knowledge transfer programmes were fully implemented. Imagination’s representatives say the programmes were strictly limited in how much of its expertise was transferred to China, and that such arrangements are common in the industry.
As Xi Jinping’s authoritarian regime seeks to acquire technological prowess fit for a superpower, the allegations involving Imagination illustrate the tensions between doing business with the world’s second biggest economy and preserving national security.
From its headquarters in a Hertfordshire village, Imagination’s engineers produce designs that weave together billions of transistors, licensing them to manufacturers who produce chips used in everything from cars to iPhones. It specialises in graphics processing units (GPUs), which were developed to produce the flowing images in video games but have turned out to be ideal for the complex operations needed in artificial intelligence. Imagination’s designs are present in 13bn devices.
The spokesperson said Imagination “has always complied with applicable export and trade compliance laws”. They said its licensing deals were “focused on enabling our customers to design” systems for “the consumer electronics, automotive and personal computer markets”.
It is understood that Imagination does not believe its technology meets the performance thresholds for military applications and maintains that its contracts prohibit military uses. But Alan Woodward, a cybersecurity expert at the University of Surrey, said it was hard for companies like Imagination to be sure their expertise does not end up contributing to applications such as self-targeting drones, one of the most hotly pursued areas of weapons research.
At least three Chinese companies have been granted so-called “architectural licences” to use Imagination’s chip designs since 2020. Because these licences allow the customer to request modifications to the designs, Imagination reveals some of the process by which its engineers arrived – over many years – at the intricate blueprints.
Imagination was aware of the risks of sharing too much of its intellectual property. For years, the company worked closely with Apple: Imagination’s chip designs helped make the iPhone possible. But in 2017 Apple announced it would start designing chips itself. Imagination accused Apple of unauthorised use of its expertise. The parties reached an agreement on a new $330m deal to license Imagination products to Apple.
The two former Imagination insiders who spoke to the Guardian believe the architectural licences that were granted to Chinese companies could be exploited in the same way – to extract Imagination’s secrets.
One said it had been a mistake for Theresa May’s Conservative government to permit the 2017 takeover of Imagination by Canyon Bridge, a private equity firm funded with Chinese state money.
The acquisition came after the US had blocked Canyon Bridge from buying the American chipmaker Lattice for $1.3bn on the grounds that “the Chinese government’s role in supporting this transaction” posed “a risk to the national security of the United States”. In the UK, where May wanted to “intensify the golden era in UK-China relations”, Canyon Bridge encountered no such obstacles and an $800m deal went through.
The Chinese-backed buyers gave the UK government assurances about Imagination’s future, including that the chip designer would not be shifted abroad. They appointed Ron Black, a veteran tech executive, as Imagination’s new boss. He would later tell an employment tribunal that he had grown concerned that China Reform, the state investment body that funded Canyon Bridge’s takeover, wanted to “steal the technology”.
In 2020, Black opposed a plan to appoint four China Reform representatives to the company’s board. He said in a witness statement that he informed Ian Levy, then a technical director at the UK’s electronic intelligence agency GCHQ, of “my concerns about Imagination being controlled by the Chinese government”. Levy replied that “this would be a problem for the UK government”.
Imagination’s owners abandoned the plan to appoint the Chinese directors after Oliver Dowden, then the Conservative minister overseeing the digital sector, sent a letter “seeking reassurance that the commitments made by Canyon Bridge in 2017 regarding the company’s management, employees and base in the UK would still stand”.
Black left the company. The employment tribunal reportedly found this month that Black had been willing to countenance licensing some of Imagination’s more basic technology in China but that he was sacked for blowing the whistle about the attempt to bring the company under Chinese control.
One of the former Imagination insiders said that after Black’s departure and the failure to install Chinese directors, it seemed “clear that the strategy was to get technology transfer to Chinese companies”. Imagination’s representatives dispute this.
The ex-insider said: “With each licence there was an agreement for several million dollars to teach them how the [intellectual property] was designed and how to modify the design.” This was referred to as a “knowledge transfer programme” for expertise that Imagination had “uniquely built over the years”, the former insider said.
Under the plan, Imagination’s top engineers were to give their Chinese counterparts “a proper step-by-step getting to know how you develop the GPU” over two years from around 2021, said the former insider, who left the company without knowing whether it was fully delivered.
The second former insider also departed before any Chinese engineers had received full training but said it was “very difficult to deny that [technology transfer] was an obvious outcome of doing architectural licences in that way”.
It is understood that Imagination considers that the arrangements with the Chinese clients were “entirely normal” and “limited in scope, duration and use rights”.
Imagination, which has relied heavily on US revenues such as those from Apple, is understood to have a policy of not doing business with any company Washington places on its “entities list” of those subject to export restrictions. That would suggest it has now terminated the licences it granted to two Chinese companies that were added to the list in October 2023.
A new report by the research organisation UK-China Transparency raises further questions about the Chinese companies.
Moore Threads, founded by a former China boss of the US chipmaker Nvidia, claims to have developed the first “China-grown” GPUs. But a report in the trade press says “key pieces” of these chips were taken from Imagination. An industry analyst who said one of the company’s GPUs used Imagination technology wrote: “Moore Threads have not been very upfront about this.”
The other Chinese chipmaker, Biren Technology, makes GPUs for AI systems. As well as Chinese state finance, Biren has received funding from the Russia-China Investment Fund, part of Beijing’s deepening alliance with Moscow. Moore Threads and Biren did not respond to requests for comment.