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Imagination Tech Shares Plunge as Apple Ends Deal With British Firm
Shares in Imagination Technologies plunged by nearly 70 percent on Monday, after Apple informed the British firm that it plans to stop using its graphics technology in Apple consumer devices in up to two years' time.
Imagination said Apple had made the decision because the tech giant was developing its own independent graphics processing chips, which would reduce its reliance on the company.
The news delivers a major blow to Imagination Technologies, which traditionally provides the PowerVR graphics architecture found in Apple's full range of iOS devices and receives a small royalty on every sale, which amounts to up to half of the British firm's revenue.
In a press release posted on the company's website, Imagination said it doubted that Apple could go it alone without violating Imagination' patents, intellectual property and confidential information.
Apple has been a licensee and stakeholder in the company since at least 2008, and became a key investor in mid-2009 after raising its stake in the firm to 10 percent. Apple paid Imagination license fees and royalties totaling 60.7 million pounds for the year to end-April 2016 and is expected to pay about 65 million pounds for this year, Imagination said.
Late last year it was reported Apple was in "advanced talks" to acquire Imagination Tech after the British chip maker announced job cuts. Despite confirming the talks, Apple subsequently decided not to make a buyout offer, but several Imagination employees were recruited by Apple as part of its efforts to build an in-house graphics team.
Imagination said Apple had made the decision because the tech giant was developing its own independent graphics processing chips, which would reduce its reliance on the company.
The news delivers a major blow to Imagination Technologies, which traditionally provides the PowerVR graphics architecture found in Apple's full range of iOS devices and receives a small royalty on every sale, which amounts to up to half of the British firm's revenue.
In a press release posted on the company's website, Imagination said it doubted that Apple could go it alone without violating Imagination' patents, intellectual property and confidential information.
Apple has used Imagination’s technology and intellectual property for many years. It has formed the basis of Graphics Processor Units ("GPUs") in Apple’s phones, tablets, iPods, TVs and watches. 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.The firm said that Apple's notification had triggered talks on alternative commercial arrangements for the current license and royalty agreement.
Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination’s technology, without violating Imagination’s patents, intellectual property and confidential information. This evidence has been requested by Imagination but Apple has declined to provide it.
Apple has been a licensee and stakeholder in the company since at least 2008, and became a key investor in mid-2009 after raising its stake in the firm to 10 percent. Apple paid Imagination license fees and royalties totaling 60.7 million pounds for the year to end-April 2016 and is expected to pay about 65 million pounds for this year, Imagination said.
Late last year it was reported Apple was in "advanced talks" to acquire Imagination Tech after the British chip maker announced job cuts. Despite confirming the talks, Apple subsequently decided not to make a buyout offer, but several Imagination employees were recruited by Apple as part of its efforts to build an in-house graphics team.
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26 months ago
One can always argue it was a **** move of Apple to poach the employees and then leave the company to shrivel away, but it was of course way cheaper and we have no idea, perhaps the CEO was impossible to work with or something.
What is for sure though is that for every empty company carcass that Apple leaves behind after just eating them up and spitting out the remains, some companies might actually get second thoughts about working with Apple. Sure, in the short run, they might make loads of money, but in the long run, the companies might go belly up when Apple leaves them after poaching all the employees and knowledge.
It might actually hurt Apple that they seem very reluctant to buy companies they've worked with for years. Someday some company with vital technology might decline to work with Apple due to the risk of being "destroyed".
What is for sure though is that for every empty company carcass that Apple leaves behind after just eating them up and spitting out the remains, some companies might actually get second thoughts about working with Apple. Sure, in the short run, they might make loads of money, but in the long run, the companies might go belly up when Apple leaves them after poaching all the employees and knowledge.
It might actually hurt Apple that they seem very reluctant to buy companies they've worked with for years. Someday some company with vital technology might decline to work with Apple due to the risk of being "destroyed".
26 months ago
It is unusual for Apple to make such a statement about its future plans since they're talking about a couple of years.
And I don't understand why they didn't buy the company since they have plenty of cash. If they're building a custom GPU from the ground up they're going to need a lot of expertise, since they are already stakeholder of Imagination why don't just buy more stocks and acquire the company with all its patents and employees?
Is it a cheap shot? Yeah
26 months ago
It is unusual for Apple to make such a statement about its future plans since they're talking about a couple of years.
And I don't understand why they didn't buy the company since they have plenty of cash. If they're building a custom GPU from the ground up they're going to need a lot of expertise, since they are already stakeholder of Imagination why don't just buy more stocks and acquire the company with all its patents and employees?
And I don't understand why they didn't buy the company since they have plenty of cash. If they're building a custom GPU from the ground up they're going to need a lot of expertise, since they are already stakeholder of Imagination why don't just buy more stocks and acquire the company with all its patents and employees?
26 months ago
Apple also makes their own CPU design, but they still have to pay for an ARM Architecture License.
I'm sure a deal like that could be made for a GPU design too. And Imagination is not the only player they can make such a deal with.
Imagination probably didn't give them as much control as they wanted.
I'm sure a deal like that could be made for a GPU design too. And Imagination is not the only player they can make such a deal with.
Imagination probably didn't give them as much control as they wanted.
26 months ago
They poached the employees instead. Way cheaper.
Is it a cheap shot? Yeah
Remember that Apple, Google, Facebook and others had to pay a major fine (9 digits) because they were caught having an agreement NOT to poach employees from each others. So obviously poaching employees is absolutely fine and expected behaviours. I wouldn't mind being offered a much higher salary from a competitor.
26 months ago
Wow, amazing drop with the stroke of a pen. Why pay for it when you can buy the talent?
26 months ago
It is unusual for Apple to make such a statement about its future plans since they're talking about a couple of years.
And I don't understand why they didn't buy the company since they have plenty of cash. If they're building a custom GPU from the ground up they're going to need a lot of expertise, since they are already stakeholder of Imagination why don't just buy more stocks and acquire the company with all its patents and employees?
They didn't really need them. Apple has an insane Graphics team that they have been building, that consists of top talent from Nvidia, AMD, Intel, & Imagination. In fact, they hired the COO of imagination. Right now, With Apples latest chips, they make 2 of the 3 components needed to make there own Graphics chips (shader cores & Graphics driver). They now only use imagination for there fixed function Graphics, which is the last part needed to create there own Graphics chip. Imagination holds the title for consistently making the most powerful mobile Graphics chips in the industry, & its said that Apples (shader cores & Graphics driver) are alot more powerful & efficient than even Imaginations.
26 months ago
Apple is out there to rule the world, not cooperate with anyone. Bad luck, other companies!
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