As Apple thinks of shifting to making its own GPUs instead of licensing it from British firm Imagination tech, the latter’s shares have gone down by a sharp 69% over fears of loosing its largest client. Apple holds an 8% stake in Imagination.
The 1 month share price screenshot below effectively shows how bad Imagination has been hint with a mere announcement. Whats also important, is the fact that Apple is looking to switch to an indigenous tech in a couple of years, and not immediately, which was till enough to swipe off three-fourths of Imagination’s yesterday share price.
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 counted 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.