Imagination Tech up for sale, as Apple battle rages on

James Marshall
June 23, 2017

British chip designer Imagination Technologies announced it had put itself up for sale on Thursday, weeks after the group launched a formal dispute against Apple.

Investors ought to pick up shares in Imagination Technologies Group Plc now that the whole company is on the auction block, so says broker Liberum Capital, which reckons Apple Inc could be a buyer.

While it's unlikely to ever come to this for semiconductor giant and smartphone application processor market leader Qualcomm, Imagination's abrupt recent fall from grace highlights the importance of a good understanding between major tech patent holders and Apple.

AppleImagination's partnership with Apple goes back almost 10 years. (Nasdaq: AAPL) will struggle to develop its own chip technology for iPhones, iPads and iPods without intruding on its intellectual property. Other Apple suppliers are also said to be feeling the pressure.

United Kingdom chip designer Imagination Technologies has put itself up for sale after losing Apple as its chief customer. However, in April Apple announced it was developing capabilities to bring the manufacturing of graphics processing hardware in-house, and reliance on Imagination Technologies products would cease within two years.

Can Imagination sell after losing so much value? Apple's move in April sent the shares to their lowest level since 2009, as 60 per cent of Imagination's value disappeared in one day.

Remember, most of Imagination's PowerVR graphics revenue comes from sales to Apple, and much of the total addressable market for mobile-oriented graphics intellectual property is closed off to Imagination. So who is likely to acquire Imagination? Imagination disclosed this month that Tsinghua Unigroup, a national champion for Beijing's ambitions to grow out its semiconductor industry, had acquired a 3% stake in the chip company.

Imagination's stock rose sharply Thursday though the shares remain below where they were trading earlier this year.

As a result, Imagination chose to commence a sale process for two of its three core businesses on 4 May. The company has revealed that indicative proposals had been received for both businesses.

"That was a pretty dire scenario, akin to selling off the family silver to keep the estate going a little longer".

Other reports by Click Lancashire

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