back to article British biz Imagination Technologies admits Apple may dump its IP

British chip designer Imagination Technologies is in trouble after Apple told the firm it would no longer be using its graphics processor cores. Apple, the firm’s largest customer, said it would stop using Imagination’s PowerVR GPU intellectual property in about two years’ time. This had a severe and immediate effect on …

  1. Anonymous Coward
    Anonymous Coward

    So a court battle

    in 3 years time then.

    1. Charlie Clark Silver badge

      Re: So a court battle

      Doubt it: if Imagination does lose Apple's business it won't be around for much longer as an independent entity. If there is a risk of infringing IP rights then Apple would most certainly have bought the company and may still do so.

      1. Anonymous Coward
        Anonymous Coward

        Re: So a court battle

        Doubt it: if Imagination does lose Apple's business it won't be around for much longer as an independent entity. If there is a risk of infringing IP rights then Apple would most certainly have bought the company and may still do so.

        They may just let it crash and then buy the rights at a discount. I've seen that before - usually after negotiations fall through because the rights holders don't realise just how beholden they are to one customer and don't see the writing on the wall. There's such a thing as milking it too far, and once you pass that point of no return, the entity with the biggest wallet will have you for breakfast.

        1. Charlie Clark Silver badge

          Re: So a court battle

          They may just let it crash and then buy the rights at a discount.

          Possibly, though this could leave them open to legal action by shareholders if it were indeed to look like market manipulation.

          1. Anonymous Coward
            Anonymous Coward

            Re: So a court battle

            Possibly, though this could leave them open to legal action by shareholders if it were indeed to look like market manipulation.

            I don't think that would stand up in court. Apple can say they were mildly interested but not at their price (hence the aborted negotiations), and when it has collapsed they now buy at a price they deem acceptable. It isn't Apple's fault they were the only source of revenue - if anything, it makes the directors vulnerable to shareholder action for not protecting the company against single client risk (assuming there were shareholders, of course).

      2. Jason Bloomberg Silver badge

        Re: So a court battle

        If there is a risk of infringing IP rights then Apple would most certainly have bought the company and may still do so.

        It is being reported elsewhere that Apple had been in talks about a buyout of Imagination last year but they had turned that opportunity down. Looks like they've just paid the price of that.

  2. Your alien overlord - fear me

    Wow, Apple penny pinching over a mere £60 million. I'm sure Apple's stock price rallied on that news !!!

    1. Charlie Clark Silver badge

      It's not about the money, it's about control of the supply chain. In theory, you can get to market faster if you own more links in the chain. Apple obviously thinks it can do this with in-house resources, otherwise it would have bought Imagination and sold off all non-GPU stuff (like MIPS).

      1. Eddy Ito

        Let's not forget that if Imagination dries up and Apple grabs the remains at a discount, it quite effectively kills of potential future rivals who could have used Imagination's tech to compete.

        1. Anonymous Coward
          Anonymous Coward

          If Imagination would designing the best mobile GPUs there are then that might be a factor, but that wasn't the case. While Apple has a huge lead over all other ARM SoCs in single thread performance, their GPUs have never been better than 'competitive' against the competition.

          Apple likes to control its own technology where there's a potential competitive advantage and/or permits closer integration between hardware and software. I'm surprised it took them this long.

          Compare with say a cellular or wifi baseband, where there isn't much competitive advantage or closer integration that can be gained. i.e., who would really care if they were first to support the latest and greatest LTE or wifi version, or managed to squeeze 5% more real world performance out of it than the rest?

  3. K
    Trollface

    Next up..

    They'll be buildings the phone themselves and ditching Foxconn..

    Great news all round, as they will be fitting with Trumps message about "Merica furst!", whilst also getting all the children off the streets and providing their families with additional incomes.

  4. Redstone

    I guess Imagination Technologies' lawyers will need to put some Intellctual Property infringement cases into the sclerotic US court system and tie up any designs Apple comes up with in legal crap for the next decade.

    I know some of the guys at IT from using their Creator Ci40 IoT dev kit. Sucks when people you know and like get a blow like this.

    1. Charlie Clark Silver badge

      US courts are notably partisan in patent cases that involve US and non-US companies.

      1. Anonymous Coward
        Pirate

        @ Charlie Clark

        I guess from your comment you know more about patent cases than about other commercial cases in US courts.

      2. Anonymous Coward
        Anonymous Coward

        never in Europe huh?

        >US courts are notably partisan in patent cases that involve US and non-US companies.

        Good thing the opposite is not true in Germany huh? Their partisanship to business is much like to their prizefighters where Teddy Atlas said something to the effect of in Germany fighting a German fighter even if you knock your guy out you are still going to get a split decision.

    2. Anonymous Coward
      Anonymous Coward

      Imagination has a low ceiling on what they could get

      Apple has been paying $75 million a year (slowly growing along with Apple's volumes) to license Imagination's cores across all their devices that use Apple A* cores, or about 30 cents per device.

      It would be almost impossible to successfully argue to a court that they deserve the same amount for only the portion of their patents Apple may use (if they can prove that in court) than they were previously getting for an entire fully functional GPU. A fully functional GPU that included not just that subset of patents, but a whole bunch of their other patents they were using in their own designs, plus whatever patents Imagination was licensing from AMD and NVidia.

      They would be much better off to negotiate an agreement to sell Apple their GPU related IP, sell off their other assets, and shut down. They were barely scraping by as it was, and Apple is over half their revenue. They can't stay in business unless they get some major new customers, which is unlikely to happen now since everyone will be concerned if they will stay in business. Most likely their other customers will start making exit plans tomorrow.

  5. Anonymous Coward
    Anonymous Coward

    It'll all end in tears

    The company I work for had won a contract with Apple against much bigger competitors. All went well for the first (of three) year until a new finance bod came along and terminated the contract without notice or recompense. We *could* have tried to take Apple to court, in their home country, but it was deemed more prudent to suck up the loss and move on. The law is worth nothing if it cannot be applied.

    1. asdf

      Re: It'll all end in tears

      Yep GTAT all over again. Execs in little companies get $$$ in their eyes and fail to realize many of the biggest companies in the world are so big by feasting on little companies usually without any leverage and often brains. Actually one of the big criteria I looked for in my current company is making sure no one customer accounted for more than 10% (actually less than 5 for us) of sales.

    2. Anonymous Coward
      Anonymous Coward

      Re: It'll all end in tears

      Just because Apple has been licensing Imagination GPUs for years doesn't mean they are obligated to do so forever. It seems they've given them advance notice, and will continue using Imagination's IP in their existing A* SoCs until those are no longer used in products. Sounds like the A11 this fall will be using an Apple designed GPU.

      As for your company, if your legal staff wasn't smart enough to put penalties in the contract for early termination then that's their own fault. Now maybe Apple refused to accept such terms and your company was so eager to get their business they were willing to sign without it. But if so they should have taken that as notice that it was effectively a year to year contract and they shouldn't make financial projections based on Apple continuing with years 2 and 3.

      As to GTAT, the problem was that they were not able to deliver to Apple what they promised. So why should Apple continue with them, and pay them to build sapphire screens that did not meet spec? Apparently no one else can either, as they are still not shipping sapphire screens, nor is anyone else (at least not at anything like volume)

      1. asdf

        Re: It'll all end in tears

        Wasn't arguing GTAT or this dude's company were in the right, quite the opposite really. Small companies are usually small for a reason and conversely true for big companies. If Apple is able to find suppliers dumb enough to take on all the risk with little of the reward its not perhaps morally appetizing but usually the market isn't.

      2. Anonymous Coward
        Anonymous Coward

        Re: It'll all end in tears

        The point is that it doesn't matter what has been agreed in the contract, when a company the size of Apple wants to ignore the law they can send in a team of lawyers (on their home ground, remember) to defend their case. Even if they were to eventually lose, the costs of prosecuting them would be impossible for a small company to bear in the meantime. They've probably got more executive washrooms in their legal department than we've got employees in total.

  6. jason 7

    So dump them...let te price tumble and then....

    ...buy them up for half the cost 6 months later.

    Probably worth buying £1000 worth of stock just in case.

    1. Nick Kew
      Black Helicopters

      Re: So dump them...let te price tumble and then....

      Glad now I sold my IMG stock last year.

      One to watch out for now: IMG could look attractive to a patent troll. Especially a US patent troll, with a US court or two in its pocket. If that happens it won't just be Apple feeling the fallout: indeed, it could almost be everyone-but-Apple, on the grounds that Apple has had more time to prepare than anyone else.

      1. Hairy Airey

        Re: So dump them...let te price tumble and then....

        As a former employee of IMG I suspect that Apple's decision will open the way for them to be bought up by another company. As I understand it several companies hold a controlling stake in IMG. Unless Apple are going to poach IMG staff I can't see how they can pull this off. Even then they are probably prevented from working for Apple by restrictive covenants.

  7. Anonymous Coward
    IT Angle

    Apple previously engaged in talks to acquire Imagination Technologies

    "From time to time, Apple talks with companies about potential acquisitions. We had some discussions with Imagination, but we do not plan to make an offer for the company at this time." March 2016

    Who else used engage in business discussions with a company only to then announce that, purely coincidentally, they were working internally on similar technology?

  8. asdf

    Apple can be evil but

    >Modem to Qualcomm.”

    GPU also right? My guess what really instigated this is Imagination IP starting to fall behind the state of the art. Qualcomm is also starting to beat it or at least match it in the GPU space.

    1. Dave 126 Silver badge

      Re: Apple can be evil but

      This story was also covered by Arstechnica, and someone posted (claiming to have once worked for Imagination, Samsung and others at various times - and because of Arstechnica's ranking system for posters I'm inclined to believe him) that Apple have been recruiting GPU talent for a few years now. He also had the opinion that Apple don't want a plain GPU, but rather a more flexible parallel compute chip, for applications beyond mere shunting of pixels around. His reasoning was based upon the idea that the resolution wars are more or less over, but things like better on-board speech recognition or better camera image processing are increasingly more important.

      It sounds plausible.

      1. Anonymous Coward
        Anonymous Coward

        Re: Apple can be evil but

        Apple already has a dedicated block on their SoC for image processing, but since it is very similar to what a GPU does it would make sense to share resources. They might want to build support in for something new, but if they are relying on a third party like Imagination then 1) word would get out what they are doing so the competition can keep up and 2) the competition could buy from Imagination without doing the grunt work of figuring out how.

        But I think the most plausible explanation is that Apple likes to control anything where they feel there is a competitive advantage to be had (i.e. not commodity technology) and/or where they can gain an advantage through tighter hardware/software integration than anyone else can do.

        They were paying less than 30 cents a device to license Imagination's GPU, so pretty sure it wasn't about saving money.

  9. Snowy Silver badge
    WTF?

    Call the IP lawyer.

    If designing a GPU from scratch is so easy why it intel's so poor.

    Even if you do design your own GPU you're going to still need to use a lot of other companies patents.

    Looks more like they saw how badly the company depended on them. Then decided to drive the price down and pick it up for a song.

    1. Anonymous Coward
      Anonymous Coward

      Re: Call the IP lawyer.

      Intel's GPU is not 'poor'. It is only poor if you are a gamer, or CAD designer, or other highly demanding user. It was never meant to compete with high end discrete GPUs for those markets. It was meant to be good enough for basic stuff like your GUI, video player, etc. And it is, I haven't used a discrete GPU in my PC for a decade, and never thought "damn, I need faster graphics."

    2. Sandtitz Silver badge
      Meh

      Re: Call the IP lawyer.

      "If designing a GPU from scratch is so easy why it intel's so poor."

      Intel is poor partly because it doesn't have the know-how of AMD/Nvidia, but mostly because their basic GPU built into most of their CPUs is "good enough" for most business cases and home users. They are in competition with both AMD (CPU) and Nvidia (computing), and every system that is sold with only an Intel GPU is a lost sale for the competition.

      The Valve statistics are very interesting as 1/6 players are relying on Intel graphics. Half of Valve players are using less than Full HD (1080p) resolution where even Intel GPUs can be usable. I've seen casual gamers play e.g. World of Tanks with appalling frame rates or cut down eye candy but somehow they're not bothered at all.

      "Then decided to drive the price down and pick it up for a song."

      IANAL, but that would be stock manipulation and would end up in fines.

      According to their Wikipedia artcle Apple has had around 10% of the company for several years, but they're still a minority stock owner. For Apple to buy the company there would need to be someone to agree to sell their shares.

      While Apple's in-house designed CPUs have traditionally been at the high end, their graphics haven't been above competition. Perhaps Imagination Tech just hasn't delivered what Apple wanted. Maybe it is as simple as that.

  10. Paul Shirley

    probably no IP worth stealing

    Imagination's problem is their tiled deferred rendering approach is no longer an advantage, is so old the patents must have expired anyway and Apple need an Opengl ES compliant device. Not an Imagination Technologies device. Khronos membership will protect them for most required IP in ES and there are plenty of ways to build such a device.

    I expect IT will struggle to find any IP to sue over. There will be quirks that need working around, hiring staff from Imagination will help but doesn't have to imply IP theft. Especially useful if Apple need to continue supporting old hardware without Imagination support.

    Standards make you replaceable.

  11. tedleaf

    Ahh but Apple becoming totally self sufficient for everything will at least take one major excuse in a few years time when Apple goes tuts up in a really big way,they won't be able to blame anyone else...

    1. asdf

      excpt

      Yeah I mean its not like they have more than most country's GDP still in the bank (whether EU takes its cut or not). I do agree I could see possibly a serious decline in their revenue in the future but considering how many years they have been virtually printing money I don't see a few years them being near administration. Probably have enough for a few decades. Hell Blackberry is still around.

    2. Anonymous Coward
      Anonymous Coward

      Ah, the ever hopeful Apple hater, predicting they're on the verge of "tuts up" since 1997!

      1. Dave 126 Silver badge

        Ah, that was classic Wired from the late 1990s. Their article '50 [or whatever] Things Apple Must Do to Survive'. On most points, Jobs did the opposite of what Wired suggested Apple should do.

  12. YARR
    Coat

    How can Apple be innovative without using their Imagination?

  13. Colin Tree

    just a bit different

    Second last sentence - "...quietly hiring a number of engineers from Imagination ..."

    Cheaper than buying the company, let the lawyers do the rest.

    Having some of their engineers means it's not a clean-room design.

    Could be done like NEC <-> Intel with their clone V20 <->8088, originally copied microcode, but final implementation was by an independent contractor, with sufficient difference to slip by the judge, internal layout was also slightly different.

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