Shares in Imagination Technologies rose by 20 percent on June 22 after the company said it had put itself up for sale. The announcement follows a difficult few months for the UK graphic chip designer, whose value plummeted by 70 percent in April when its largest customer, Apple, announced it would terminate its relationship with the company.
Imagination Technologies has manufactured graphic chips for Apple products dating as far back as the early iPod, and royalties earned from Apple devices account for about half of the firm’s revenue. However, in April Apple announced it was developing capabilities to bring the manufacturing of graphics processing hardware in-house, and reliance on Imagination Technologies products would cease within two years. The firms have been in dispute over the legality of Apple’s actions ever since.
When Apple announced its break from Imagination, the firm alleged Apple would be unable to manufacture its own version of a chip without infringing on intellectual property rights
When Apple first announced its break from Imagination, the UK firm alleged Apple would be unable to manufacture its own version of a chip without infringing on intellectual property rights. Then, in May, Imagination took further action by launching a “dispute resolution procedure” with Apple over its plans. It is likely additional lawsuits will follow due to the potential devastating impact on Imagination’s profits if other customers attempt to take hardware manufacturing into their own hands too.
According to Imagination, the decision to sell was prompted by a number of groups expressing interest in a buyout over the past few weeks. “The board of Imagination has therefore decided to initiate a formal sale process for the group and is engaged in preliminary discussions with potential bidders”, the firm said in a statement.
Advances in graphics processing unit (GPU) technology since the days of early video games have been crucial to designing more user-friendly phones. A GPU is the electronic circuit that handles all computations related to image generation, removing this task from the phone’s central processing centre. High quality graphics processing capabilities have been instrumental in the ubiquitous adoption of smartphones since they enable the generation of high-quality images without hampering phone performance for a vastly superior user experience.