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Ever since Apple tree launched the original iPhone, it's worked closely with Imagination Technologies. Even after Apple began edifice its ain GPU architecture, it relied on Imagination for other building blocks of its full solution. Apple tree, nevertheless, appears to be bringing that human relationship to an terminate, and Imagination Technologies' stock has cratered as a outcome.

On Fri, Imagination Technologies was trading at 268.75 pence sterling. As of this writing, it's trading at ~102 pence sterling. That's a cataclysmic drop for the company, and it's driven by a letter It posted before today. It reads, in part:

Imagination Technologies Group… has been notified by Apple tree Inc. ("Apple"), its largest customer, that Apple is of a view that it will no longer use the Group's intellectual belongings in its new products in 15 months to two years' time, and every bit such will non be eligible for royalty payments under the electric current license and royalty agreement…

Apple has not presented whatsoever testify to substantiate its assertion that information technology will no longer require Imagination's technology, without violating Imagination'south patents, intellectual belongings and confidential information. This show has been requested by Imagination only Apple has declined to provide information technology.

Further, Imagination believes that it would be extremely challenging to design a brand new GPU compages from basics without infringing its intellectual holding rights, accordingly Imagination does not take Apple's assertions.

Apple'south notification has led Imagination to discuss with Apple potential alternative commercial arrangements for the current license and royalty agreement.

Every bit recently as terminal year, Apple was reportedly in talks to buy Imagination Technologies, just those deals brutal through. Instead, Apple tree hired a number of Imagination'south former employees and engineers, which may be role of why Information technology is taking a rather aggressive stance with its claims that it would be difficult for Apple to develop a not-infringing part. Part of what makes the state of affairs muddy is that Apple may have already congenital its own custom GPU. Apple'southward payments to Imagination Technologies totaled £sixty.7 through the year that concluded in April 2022, and Apple is expected to pay roughly £65 1000000 ($81 million USD) through April of 2022. That's roughly one-half of Imagination Technologies' revenue, which explains why the stock has taken such a chirapsia.

Imagination Technologies' statements about taking Apple tree to court aren't an empty threat, just court proceedings aren't a substitute for ongoing license acquirement. Even if Information technology won a court case against Apple, the appeals and counter-suits could drag on for years. The judicial system isn't designed to settle these kinds of disputes quickly, and Information technology isn't in neat shape correct now. The company fired 350 people concluding year and announced it would seek to reduce operating costs afterward a slump in iPhone sales slugged its lesser line. To-date, Imagination Technologies has tried to protect its PowerVR, MIPS, and Ensigma production divisions from cuts, but that may no longer be possible. PowerVR has provided the bulk of its earnings for years, and then we wouldn't be surprised to see the other segments jettisoned first.