Imagination Tech shares plunge 69 percent as Apple abandons British firm

Apple is developing its own technology, but Imagination said this would be hard without infringing patents.

Imagination Technologies, the British chip designer that provides PowerVR graphics processors for use in the iPhone and iPad, has said that Apple will no longer be licensing its technology in less than two years' time. This will give it greater control over its products and reduce its reliance on Imagination's technology.

The Financial Times reported previous year that Apple, which owns 8 per cent of the United Kingdom company, had held talks about buying Imagination.

The chipmaker said: "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".

Up to now, Apple's custom silicon-on-a-chip (A10 Fusion, A9, A8 etc) have relied heavily on GPU designs from Imagination Technologies for graphics performance tasks.

Imagination isn't going to take Apple's decision lying down, though, and has warned that the firm risks infringing its intellectual property rights by developing its own graphics chips. Shares of Imagination Technologies fell as low as 82.50 pence for its biggest-ever intraday slump, and were down 68 percent to 85 pence as of 8:22 a.m.in London.

Imagination is now discussing potential alternative commercial arrangements with Apple for the current license and royalty agreement. The British company received 60.7 million pounds ($76.1 million) in license fees and royalties from Apple in the year ended April 30, 2016, and expects to get 65 million pounds in such payments in the fiscal year ending this month, according to the statement. And reports have even suggested that the Cupertino giant was mulling the acquisition of the company a year ago.

Imagination said that as a result it would look for a new commercial arrangement with Apple. Apple is also Imagination Technologies' third largest shareholder.

  • Carolyn Briggs