Imagination Technologies said in a statement this morning that it has been informed by Apple, its biggest customer, that it will no longer use Imagination’s intellectual property in new products in 15 months’ to two years’ time.
The UK group’s share price was at around 100p this morning compared to more than 270p at the close of business last Friday (March 31).
Apple has used Imagination’s technology and intellectual property in its graphic processor units (GPUs) for many years, in products such as phones, tablets, iPods, TVs and watches.
According to Imagination, Apple has said it is working on its own technology to replace Imagination’s GPUs – although Imagination has questioned whether this will be possible without infringing its own patents and intellectual property.
Imagination Technologies has been notified by Apple, its largest customer, that Apple is of a view that it will no longer use the group’s intellectual property in its new products in 15 months to two years time, and as such will not be eligible for royalty payments under the current license and royalty agreement.
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.
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.
Further, 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.
Apple’s notification has led Imagination to discuss with Apple potential alternative commercial arrangements for the current license and royalty agreement.
Imagination has reserved all its rights in respect of Apple’s unauthorised use of Imagination’s confidential information and Imagination’s intellectual property rights.
A further announcement will be made in due course.
That is all Imagination is saying for now, a spokeswoman told Electronics Weekly.
It is worth bearing in mind that, such is the power of the Apple name amongst stock markets, investors tend to over-react both positively and negatively after Apple news.
Imagination only recently announced Furian, its next-generation of graphics processors – intended to improve gaming and artificial intelligence on mobile phones.