Apple

British chip designer Imagination Technologies has today reported that Apple has served them with a notice saying they will no longer be employing its PowerVR graphics chips in the iPhone and other products. The transition is expected to happen in the coming two or fewer years’ time, which will see Apple not license the former’s technology and instead develop its own independent graphics design.

According to Imagination Technology’s blog post, Apple has informed the company that it’ll no longer be employing their intellectual property (graphics design patents) in its upcoming new products. The Cupertino giant has been using Imagination Technology’s GPU technology in most of their products ranging from phones, iPods, and tablets to TVs and watches. The company further continues to mention:

Apple has asserted that it has been working on a separate, independent graphics design in order to control its products and will be reducing its future reliance on Imagination’s technology.

But, Imagination Technology is not completely positive about Apple’s plans or the technology they’re employing to develop their own graphics chip design from scratch. This is because the Cupertino hasn’t presented any evidence on their progress, even after repetitive requests from the company. This has piqued Imagination’s interest and it is now curious to see Apple’s chips that are designed without ‘violating Imagination’s patents, intellectual property, and confidential information’. The company believes:

It would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights, accordingly Imagination does not accept Apple’s assertions.

This development comes a rather significant blow for Imagination Technology, which counts Apple as its largest customer. The blog post suggests that the chip designer relies on the Cupertino giant for half of its annual revenues, which amounted to £60.7 million for the year ended April 2016. The Cupertino giant’s license fees and royalties are expected to amount to £65 million for the year ending April 2017. And this might be one of the last cheques Apple writes down on their name.

Imagination Technology is at a significant loss as Apple would no longer be shelling out capital in the form of royalties and licensing fees for the iPhone, as well as iPads in about 15 to 24 months. This has caused Imagination Technology’s share prices to jettison on a downward spiral, currently down nearly 70 percent. It is currently trading around £80.

In addition, Apple is currently said to be holding more than 8 percent of Imagination Technology. And reports have even suggested that the Cupertino giant was mulling the acquisition of the company last year. It had initiated talks regarding a full takeover but then decided otherwise. Now, the development suggests that Apple decided not to shell out money on the acquisition and instead invest it in developing its own graphics chip design.

But, Imagination Technology, in the official blog post mentions that it has now initiated talks about potential alternative commercial arrangements for the current license and royalty arrangements. And it is now keeping a close watch on Apple’s developments so that it can launch an all-out assault (read lawsuit!) against the Cupertino giant if unauthorized use of their IP and patents is found in their graphics chip designs.

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