“A small but critical Apple Inc. supplier here is raising the prospect of a patent fight with the smartphone giant after Apple said it would stop using its technology to process graphics in its iPhones and other devices,” Stu Woo reports for The Wall Street Journal. “Shares in Imagination Technologies Group IMG -61.79%▲ PLC fell as much as 70% in early London trading after it disclosed that Apple—its biggest customer—would stop using Imagination technology in the graphic processing units in its devices within 15 months to two years.”

“Imagination said Monday that Apple told the company it was working on a ‘separate, independent’ design. Imagination said it believed it would be “extremely challenging” to design a brand-new GPU architecture ‘without infringing its intellectual property rights,'” Woo reports. “Imagination licenses its technology to Apple, which pays it royalties. Imagination said it was in talks with Apple about an alternative licensing and royalty arrangement.”

Woo reports, “Imagination is a relatively small part of the global smartphone supply chain, but its technology has been a key component of Apple products for years, including its phones, tablets, iPods and watches.”

Read more in the full article here.

MacDailyNews Take: As we wrote this morning, “This is hardly surprising (see related articles below). It’s also quite the cautionary tale to small companies that Apple wants who decide not to take Apple’s (likely lowball) offer: Reject Apple’s deal, get sold to the Chinese, lose your top talent to Apple, lose your Apple contract, lose 3/4 of your market cap in a single day, and face years of protracted legal battles. Not an appetizing prospect, is it?”

SEE ALSO:
Imagination Technologies’ shares collapse after Apple dumps UK chip designer – April 3, 2017
Apple nabs top talent from iPhone 7 GPU chipmaker Imagination Technologies – October 13, 2016
After failed takeover talks with Apple, Imagination Technologies sells stake to state-owned Chinese company – May 9, 2016
Apple in ‘advanced talks’ to acquire Imagination Technologies for PowerVR GPU – March 22, 2016