Imagination Technologies fell on hard times in April when Apple announced plans to stop using its graphics chips in future smartphones, tablets, and other products. Within hours, over $500 million vanished from Imagination's stock market value, throwing a wet blanket on its future fortunes.
Imagination's next move became clearer in regulatory documents filed Thursday. The company said that it would divest its other businesses and start a "dispute resolution procedure" in an effort to salvage its lucrative ties to Apple. The moves are a particularly low-point for Imagination, which for years had ambitions to compete with ARM.
On the chopping block is a business that sells rights to the MIPS architecture, which is notably used in Mobileye's machine vision chips for top-tier automobiles. The U.K. company is also aiming to sell Ensigma, a business that rents intellectual property for wireless Internet of Things devices.
Disposing of the businesses will help Imagination focus on its flagship PowerVR chips, which dominate high-end smartphones and which the company has been repositioning for virtual reality. The graphics technology has been at the heart of the dispute with Apple, which has used Imagination's graphics in iPhones since 2008.
It also became apparent Thursday that Imagination is seeking a compromise before its licensing deal with Apple expires. Apple will no longer need to license Imagination's technology after finishing its custom graphics next year. It's unclear whether Imagination will open a lawsuit, but talks with its largest customer have not panned out.
“Imagination has been unable to make satisfactory progress with Apple to date regarding alternative commercial arrangements for the current license and royalty agreement,” the company said. Without elaborating, Imagination said that it wanted to resolve the standoff in a more “structured" way.
The revelation that Apple is developing its own graphics spilled out last month. Imagination notified investors that Apple would scrap its designs starting in 15 to 24 months. The company, which collects royalties on devices sold with its technology, stands to lose half its annual revenue with Apple’s change-of-heart.
The announcement dealt a heavy blow to the 32-year-old company, which is hurting from competition with ARM. Last year, it cut 350 jobs – or a fifth of the workforce – and Hossein Yassaie, the company's founder, stepped down after eighteen years as chief executive. It has lost business in the graphics market to ARM's Mali cores, which are increasingly used in Android smartphones.
Apple's withdrawal is one of the most spectacular displays of how its decisions can make or break semiconductor suppliers. The move is particularly ironic because of how vital Imagination's technology has been to Apple, which owns almost 10% of the chip designer and has poached engineers from its employee ranks.
For that reason, Imagination is skeptical that Apple can design a new graphics architecture without its help. In an April regulatory statement, the company said that "it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights.”
from Electronic Design - Engineering Essentials Curated By Experts http://bit.ly/2qFZ8TS
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