Imagine that: Chinese buyer eyes troubled British chip firm ditched by Apple

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Imagination's chips will not be used by Apple in future (Source: Getty)

Imagination Technologies, the troubled British chipmaker recently dropped by Apple, has piqued the interest of a Chinese private equity buyout fund.

Canyon Bridge Capital Partners, which last year snapped up a US chip business for $1.3bn, is eyeing a potential bid for the firm, the Daily Telegraph reports, after Imagination put itself up for sale as a result of Apple saying it would no longer use its chips in the iPhone.

The potential bid could be for all or just some of the business, according to the report which sent shares up more than six per cent in early trading on Monday morning.

Read more: Apple is moving in on Imagination Technologies turf with new UK office

Canyon Bridge is currently battling to get approval for its billion dollar takeover of US chip maker Lattice Semiconductor from US authorities. The fund is based in Silicon Valley but backed by the Chinese government.

Several deals by Chinese firms for US chip makers have been rebuffed as a result of the US Committee on Foreign Investment's security concerns.

A potential deal for Imagination could raise similar concerns in the UK. 

Imagination Technologies officially put itself up for sale in June after warning earlier in the year that Apple, its biggest customer will no longer use its technology. The two firms are currently in talks to resolve the dispute.

Read more: Imagination Technologies shares drop as Apple bites back

Analyst Janarden Menon at Liberum said they expect "multiple companies to be interested in buying Imagination" after the tech firm revealed it returned to profit.

Several Chinese buyers are interested in Imagination, according to the newspaper report, with several of them from China. The country spends more on importing semiconductors than oil and is the largest smartphone market in the world.

China-to-UK mergers and acquisitions hit a record number of deals last year, worth $7.65bn.

Imagination shares were trading up at 147 pence per share at pixel time.