Imagination Technologies Group (IMG) share price crashes as it gears up for a battle with Apple: US tech giant says it no longer needs British firm’s intellectual property
British tech firm Imagination Technologies has revealed that Apple, its biggest customer, could end royalty payments for the use of its intellectual property in two years time.
Shares in Imagination dropped by 63.2 per cent at the open and 45 minutes into morning trading were down 70 per cent.
Imagination’s share price has plunged this morning (Source: investing.com)
The chip-maker has supplied Apple with technology and intellectual property for years. Imagination said its tech formed the basis of graphics processor units (GPUs) in Apple’s phones, tablets, iPods, TVs and watches, and Apple has previously come close to buying Imagination outright.
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However, Apple is now “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 Imagination will not be eligible for royalty payments under the current license and royalty agreement.
Imagination added: “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 British company also believes 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”.
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The group said Apple’s notification has led Imagination to enter discussions with the iPhone maker about potential alternative commercial arrangements for the current license and royalty agreement.
Losing Apple’s business would be a huge blow to Imagination, which has recently struggled to deal with a slowing smartphone market. Despite a restructuring plan that includes job cuts and the sale of non-core business, Imagination last year posted its biggest ever loss.