Bad Apple? British chip maker puts up the ‘for sale’ sign after Apple cancels its chip royalty payments
British chip designer Imagination Technologies has placed the ‘for sale’ above its doors after its chip licensing row with Apple threatened its survival.
It comes after Imagination revealed in April that Apple planned to stop paying it royalties for the graphics technology used in iPhones, iPads, Apple Watches and other mobile devices. That news crashed the shares in the UK company by 70 percent.
This was because Apple was Imagination’s largest customer, and accounted for around half its annual revenue. It is also an 8 percent shareholder, but had previously denied any intention to buy the British firm.
The news that Apple was to stop using the British company’s graphics technology in its products came after the iPad maker said it was working on “separate, independent” graphics technology and would therefore be “reducing its future reliance” on Imagination.
It would then cease royalty payments to the British firm by 2019.
For its part, Imagination immediately began talks on alternative commercial arrangements for the current license and royalty agreement.
And to be fair, Imagination has also tried branching out from its GPU expertise into other areas, including MIPS and even a barebones PC to rival the Raspberry Pi.
That said, it has been trying to sell its MIPS business since May.
Imagination’s long running CEO Hossein Yassaie also resigned last year, and the company has already undergone a painful restructuring that included the loss of some 350 jobs.
And Imagination has disputed Apple’s intention to halt royalty payments.
“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,” Imagination previously stated. “This evidence has been requested by Imagination but Apple has declined to provide it.”
Imagination has said previously it would be “extremely challenging” for Apple to switch to graphics technology that didn’t infringe on Imagination’s patents, meaning there could be grounds to contest the planned change.
“Imagination believes that 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,” the company previously stated.
But it seems that Apple is not backing down, which has forced Imagination to put itself up for sale, a move that drove its share price up 20 percent.
Imagination was quoted by The Guardian as saying on Thursday that “over the last few weeks it has received interest from a number of parties for a potential acquisition of the whole group”.
“The board of Imagination has therefore decided to initiate a formal sale process for the group and is engaged in preliminary discussions with potential bidders,” it reportedly said.
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