“Apple’s announcement to ditch the graphics chips designed by Imagination Technologies (IMG) and the subsequent share price collapse that followed could leave the door open for the U.S. giant to acquire the British firm, investment bank Jefferies said in a note on Tuesday,” Arjun Kharpal reports for CNBC.
“Imagination Technologies design graphics processing units (GPU), which are key components in Apple products allowing high-quality images on its retina displays. Apple on Monday said that it’s developing its own ‘independent graphics design’ and will be ‘reducing its future reliance on Imagination’s technology’ over the next 15 to 24 months,” Kharpal reports. “Shares of the U.K. company plunged on Monday closing at £1.03 ($1.28), down from Friday’s close of £2.68. Apple is Imagination’s largest customer. Investec said in a note on Monday that it had expected Apple to account for around 50 to 60 percent of the group’s sales this year.”
“One theory about why Apple made the move is that it eventually wants to acquire Imagination for its key PowerVR GPU,” Kharpal reports. “Apple is Imagination’s fourth-largest shareholder with a stake of just over 8 percent, according to regulatory filings, and the Cupertino-based titan certainly has enough cash to make an acquisition. Last year, Apple confirmed that it was in talks to acquire Imagination but did not make an offer, showing that it was interested… The iPhone maker has also hired key players from Imagination and other chip companies as it strives to get a tighter hold on its supply chain, which could give it the expertise it needs to go it alone. Another theory behind the clash of the two companies is that it’s actually a bargaining tactic.”
Read more in the full article here.
MacDailyNews Take: Message: Don’t fsck with Apple.
Of course, one would hope there is some mechanism in place to prevent Apple from running roughshod over suppliers, offering them lowball offers and, if they refuse, destroying their stock prices with threats of lost business while also pilfering the supplier’s key employees. (See related articles below.)
We expect such mechanism to be pursued via legal channels if Imagination Technologies feels they have been/are being railroaded.
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