Apple ends graphics chip deal with Imagination, will turn to in-house GPU development

[midian182]

UK Chip designer Imagination Technologies has seen its share price fall by nearly 70 percent after Apple said it plans to stop using the firm’s graphics technology inside iPhones and iPads within the next “15 to 24 months.”

In a statement issued today, Imagination said Apple, which is one of its biggest shareholders, will stop using its products because the Cupertino company is developing its own graphics processing chips.

Apple's licensing agreement with Imagination has been in place since at least 2008. It owns more than 8 percent of the UK firm, and came close to acquiring it last year. A deal never materialized, but several Imagination employees were recruited by the iPhone maker. Imagination gets around half its revenue from Apple, thanks to royalties from its PowerVR graphics architecture found in iOS devices.

While the firm does have licensing deals with other customers, Imagination called Apple’s contract “essential” in its latest annual report. Apple paid about £60.7 million (around $75.88 million) in royalties to Imagination last year, and it is forecast to pay about £65 million ($81.26 million) for the current financial year, according to the BBC.

Ending the agreement may not be a smooth process for Apple. Imagination writes that the firm's plans to develop in-house chips could see it infringe on the UK company’s intellectual property rights.

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.

Imagination did note that it is looking at "potential alternative commercial arrangements" with Apple, though the news still wiped around £515 million ($643 million) off the value of the company.

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https://www.techspot.com/news/68770-apple-ends-graphics-chip-deal-imagination-turn-house.html

 

[Skidmarksdeluxe]

This type of thing is usual business practice for most big corporations and their partners. Use 'em, milk 'em, then chew 'em up then spit 'em out, not turning around once to look at the all the destruction caused and lives they are ruining but Apple always seems to take it to another level. It's dog eat dog out there and getting rid of the competition (Imagination will probably fade into obscurity now) without batting an eye ensures Apple remains the apex predator... until the next testosterone driven king of the jungle arrives, baring teeth, roaring and snarling.
I wonder when Apple is going to give Foxconn the good old heave-ho because it's just a matter of time.

 

[mbrowne5061]

I wonder when Apple is going to give Foxconn the good old heave-ho because it's just a matter of time.

Who would they use to assemble their devices instead?

 

[Kenrick]

Why blame your customer for your bad business moves. Relying into one customer for more than half of your revenue is really a dumb move in electronics/IT especially the mobile market. When Apple developed their Swift CPU which is now the Apple A9X, this is the most efficient,fastest and powerful ARM cpu as of date...... That was a hint that they can do also an in-house design of their GPU. Business is all about luck and having the skill to predict the future and make a 1st and 2nd plan out of it.

 

[Skidmarksdeluxe]

Who would they use to assemble their devices instead?

Oh I don't know... Maybe the 100's of companies that already exist that assemble devices for other manufacturers will kill their own mothers to secure a contract on the scale of Apples orders. Contrary to what it looks like you think, most manufacturers don't actually make or assemble their own devices, they're contracted out to 3rd party manufacturing companies.

 

[Mouldy CPU]

Why blame your customer for your bad business moves.

What the article doesn't mention is Apple has poached Imagination's COO and engineers. Thus, the warning about potentially infringing on Imagination's patents.

If you're dealing with Apple, it's only a matter of time until they sucker punch you. The only thing keeping Foxconn safe is the Chinese government.

 

[J spot]

Why blame your customer for your bad business moves. Relying into one customer for more than half of your revenue is really a dumb move in electronics/IT especially the mobile market. When Apple developed their Swift CPU which is now the Apple A9X, this is the most efficient,fastest and powerful ARM cpu as of date...... That was a hint that they can do also an in-house design of their GPU. Business is all about luck and having the skill to predict the future and make a 1st and 2nd plan out of it.

I'm not an expert on this, but I don't think they can just simply pick and choose their customers, and thus decided that they're going to decline other customers.

If Apple represents half of their revenue, then that's because that's what their market dictates. In a similar manner it would be the same as if Apple represented 0% of their revenue, then their revenue doubled because Apple became one of their customers.

It's not like investing where someone decided to put all their eggs in one basket, rather than diversifying. But more like, you take ALL the customers that you can get.

 

[SamuraiSamson]

The way these deals with Apple turn out it almost always ends up being bad for the other side.

 

[mbrowne5061]

Oh I don't know... Maybe the 100's of companies that already exist that assemble devices for other manufacturers will kill their own mothers to secure a contract on the scale of Apples orders. Contrary to what it looks like you think, most manufacturers don't actually make or assemble their own devices, they're contracted out to 3rd party manufacturing companies.

I work as an engineer in a factory.

How did I imply that I think most companies assemble their own devices? I asked who apple would hire instead of Foxconn. This implies that I knew they didn't assemble their own devices now, and wouldn't begin to start assembling their own devices later. Or do you mean how Foxconn is the final stop for assembly, and they are bringing in different subassemblies from other manufacturers? That doesn't change the fact that Foxconn is doing the final assembly, they need the bandwidth to produce enough iPhones to meet the demand, and they need to run stringent testing and quality procedures on all the devices that go through them. This is how nearly every device, electrical or mechanical, is made; smaller companies feeding one subassembly to larger companies that make either yet another subassembly or the final assembly. But with each further step in manufacturing, the company handling it increases in size out of necessity.

Yes, there are hundreds of companies who would kill for a contract from Apple. How many have the bandwidth available to be the final assembler of a new generation of iDevice to Apple's QC standards?

I have no love for Foxconn, but stop being so reductionist in your arguments.

 

[Skidmarksdeluxe]

I work as an engineer in a factory.

How did I imply that I think most companies assemble their own devices? I asked who apple would hire instead of Foxconn. This implies that I knew they didn't assemble their own devices now, and wouldn't begin to start assembling their own devices later. Or do you mean how Foxconn is the final stop for assembly, and they are bringing in different subassemblies from other manufacturers? That doesn't change the fact that Foxconn is doing the final assembly, they need the bandwidth to produce enough iPhones to meet the demand, and they need to run stringent testing and quality procedures on all the devices that go through them. This is how nearly every device, electrical or mechanical, is made; smaller companies feeding one subassembly to larger companies that make either yet another subassembly or the final assembly. But with each further step in manufacturing, the company handling it increases in size out of necessity.

Yes, there are hundreds of companies who would kill for a contract from Apple. How many have the bandwidth available to be the final assembler of a new generation of iDevice to Apple's QC standards?

I have no love for Foxconn, but stop being so reductionist in your arguments.

Glad you enjoyed it

 

[HyPeroxya]

Apple actually made a bid for the whole of No-imagination, they obviously got greedy and turned it down, not thinking that Apple would call their Bluff. Its a big bluff to call , No-im presume that apple CANNOT design a well functioning GPU without infringing on their Patents...I suspect a few well placed ppl from both NV and ATI and KRYO have been brought in , probably a few years ago, to start a stealth unit , just for this purpose. Remember the Ghost is still watching over it all....