Apple has notified Imagination Technologies that it plans to stop using its graphics technology in its devices within two years. Shares in the British firm fell by nearly 70% on Monday.
Apple has used Imagination’s technology and intellectual property for many years. It has formed the basis of Graphics Processor Units (“GPUs”) in Apple’s phones, tablets, iPods, TVs and watches. Apple has asserted that it has been working on a separate, independent graphics design in order to control its products and will be reducing its future reliance on Imagination’s technology.
The news means Imagination Technologies will be taking a major blow to the bottom line, as the firm provides the PowerVR graphics architecture used in Apple’s iOS devices, and receives a royalty on the sale of every device. That income amounts to around half of the tech firm’s annual revenue.
In its release, the British firm said it doubted Apple could move forward with its own GPU without violating Imagination’s patents, intellectual property and confidential information.
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.
The firm said Apple’s notification has “led Imagination to discuss with Apple potential alternative commercial arrangements for the current license and royalty agreement.”
Apple has licensed the Imagination Technologies GPU tech since at least 2008, and has been a stakeholder for just as long. The Cupertino firm became a key stockholder in the British company in mid-2009, when it raised it’s investment stake to 10%.
Apple paid Imagination license fees and royalties totaling 60.7 million pounds for the year ending April 2016, and is expected to pay out around 65 million pounds for this year.
Last year, Apple was reported to be in talks to purchase the GPU tech firm after job cuts were announced by Imagination. While Apple confirmed those talks, they eventually ended the talks with no deal made. They did however, lure several Imagination Technologies employees into the Apple fold as part of an effort to develop an in-house graphics solution.