British fabless chip designer Imagination Technologies has extended its licensing agreement with Apple, which means the US company will continue using PowerVR chips in its mobile devices.
Imagination’s stock price rose as much as 20 percent on the London Stock Exchange following the announcement. According to the Guardian, that’s quite unusual – the deal was renewed several times in the past, but it had no impact on the share price in the absence of a similar announcement.
Imagination makes the PowerVR image processing chips that are found inside every mobile device released by Apple since iPhone 3GS. The Series 1 silicon was originally intended for desktop computers, at a time when the company was competing in the PC market against rivals like the now-defunct 3dfx Interactive.
Being fabless, Imagination doesn’t make any physical chips. Instead, its designs and patents are licensed to other companies including Texas Instruments, Intel, NEC, BlackBerry, Samsung, Freescale and Apple. The latter actually holds an almost 10 percent stake in Imagination Technologies.
The two companies didn’t reveal the financial details of the deal but said it would last several years and cover a variety of uses of current and future PowerVR technology.
Apple will have to cover licensing costs and pay royalty fees on every System-on-a-Chip (SoC) featuring Imagination’s intellectual property that’s produced by Apple’s suppliers, such as Foxconn.
Apple’s A7 SoC that powers iPhone 5S and iPad Air relies on a PowerVR chip as its GPU component, alongside 1.4 GHz, 64-bit dual-core CPU designed by ARM. The US company is Imagination’s largest customer, responsible for almost a third of its revenue.
The announcement will come as a comfort to investors who fear that Imagination is losing the mobile chip market to its rivals – ARM and Nvidia. The second is currently considering a design licensing structure to increase its revenues. It also puts a stop to rumours that Apple is preparing to design its own graphics cores.
At this year’s Consumer Electronics Expo in Las Vegas, Imagination announced that its Series 6XT chips offer an up to 50 percent increase in performance when compared against the previous generation silicon.
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