Well, Imagination that! Apple just confirmed something that we’ve been suspecting for a while now. The company is indeed working on its own graphics processing unit that could power iPhones, iPads — and Macs? — in the future, and that spells trouble for a long time Apple customer. UK tech company Imagination Technology announced on Monday that Apple will stop using its GPUs in “15 months to two years time.”
Imagination Technologies’ revelation wiped £500 million of the company’s market value, as the stock opened 60% lower than its closing price on Friday.
We often talk about the importance of winning Apple’s iPhone supply business, and this is clear proof of what can happen to a company when the products it develops no longer serve Apple’s plans.
“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,” Imagination said.
Apple, who owns an 8% stake in Imagination, currently accounts for half of the company’s revenue. Apple even considered purchasing Imagination last year, but those plans fell through. Instead, Apple hired a number of former Imagination employees, including former COO John Metcalfe, a 20-year veteran of the company.
In its announcement of the news, Imagination also said that it’s prepared to take Apple to court should the iPhone maker violate its intellectual property.
“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,” the Imaginaition said. “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 paid Imagination licensing fees totaling £60.7 million in the year ending in April 2016, half of its total revenue. According to Reuters, Apple should pay about £65 million this year.
Apple is yet to announce any GPU chips of its own, and it’s likely it won’t make any announcements until it’s ready to unveil a product that will make use of the new chip.