Feature Story

Imagination Chief Urges UK to Nurture IT

The head of one of the UK’s largest technology companies has warned that the country’s IT sector risks becoming irrelevant unless more is done to nurture entrepreneurs and help turn their ideas into successful businesses.

Hossein Yassaie, the Iranian-born chief executive of chip designer Imagination Technologies, said he found it increasingly “frustrating” that, despite the huge wealth of talent on offer, the UK had produced only a handful of large companies that are able to compete on the world stage.

“The UK has a lot of capable engineers and clever people. But while they have the technical vision, they fail to take it to market,” Mr Yassaie said in an interview with the Financial Times. “Half of the ideas out there are technically great but won’t get to market.”

Mr Yassaie – who joined Hertfordshire-based Imagination 18 years ago and became chief executive in 1998 – said UK entrepreneurs were getting so carried away with the creative process that they failed to think about turning their ideas into marketable businesses.

Under Mr Yassaie’s leadership, London-listed Imagination has focused its attention on designing graphics chips that have become increasingly important for personal computer and phone manufacturers. The group now licences its chip designs to a range of companies including Dell, Acer, HTC and Samsung.

Intel and Apple, which uses Imagination-designed chips in its iPhone and iPad, have both invested in the group. Intel holds about 14 per cent stake, while Apple holds nearly 10 per cent.

Imagination trebled annual pre-tax profits for the year to April 2010 to £10.2m on revenues up 26 per cent at £80.9m, buoyed by the explosive growth in smartphones sector. The group’s shares have risen nearly 60 per cent since the start of the year and based on Friday’s closing price it has a market capitalisation of nearly £1bn ($1.6bn).

Mr Yassaie, who recently met Prime Minister David Cameron to discuss the future of the UK’s technology sector, said he felt that the country had just 10 to 15 years to focus on pushing the technology sector forward or risk being left behind by other countries.

He said too many British companies sold out before they got to a credible size and as a result failed to develop brands that matched the might of US giants such as Cisco, Google and Apple. Only a few UK companies ever reached the size and geographical reach of Autonomy, the software group, Imagination or its bigger rival ARM.

UK entrepreneurs were not being strategic enough, Mr Yassaie said. “If you take Google or Apple, they did not just take a one to two year view.”

He said the government needed to do more to expand centres of excellence and follow the examples set out by countries such as Taiwan, home to some of the largest contract chip manufacturers in the world including Taiwan Semiconductor Manufacturing Co. “TSMC didn’t happen by accident. It was planned.”

There have been suggestions that the UK government should set up a fund to help promote new businesses. Mr Yassaie said such a scheme would only work if the money invested in each project was at least £5m and was highly targeted at a few strategic IT sectors.

He said the UK should focus on building brand names and fabless semiconductor companies, chipmakers that do not own their production facilities but outsource the work.

As well as designing chips, Imagination took the unusual move a few years ago of creating the Pure DAB digital radio brand to highlight the potential for chips it was designing. The launch of the Pure brand helped to kick-start a push into DAB digital radios by other manufacturers.

Mr Yassaie said it still made sense to make technology in places such as India and China, home to the world’s largest contract manufacturers. However, he admitted that there may come a point when worries over the carbon footprint involved in shipping goods, might push companies to start manufacturing more locally.

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