This past week Apple announced that they were creating their own in-house mobile processor for their devices. This news immediately affected Imagination Technologies’s shares, which dropped almost 70 percent. Imagination Technologies created Apple’s PowerVR graphics that supplies them with a small royalty on each transaction. Those royalties make up a large percentage of the businesses revenue.
What Happens Next?
While this news affects Imagination Technologies by worrying them on how to further float as a business without such a major client, they have been poached by more SoC vendors as of late. This this is good news for the company, they will need many new clients to make up for the loss of Apple.
This news doesn’t come without its speculations though. Last year Apple mentioned looking into buying Imagination Technologies when Imagination Technologies announced that they would be shrinking their staff count. Apple ended up not proceeding with this idea, but instead took on some of the laid of employees and recruited them for their own, similar project. Apple has stated that they are making this switch to in-house to further their goals of every aspect being created by themselves for their devices.
The Future Brings Change
The future looks interesting between the two companies as a spectator. We shall see what happens when apple officially cuts ties in one to two years. Imagination Technologies is very curious to see how they can survive without their product and not break any patents, release confidential information, or misuse intellectual property. They have multiple GPU patents that will be difficult to work around. Plus, what will Apple do in terms of backward compatibility for their pre-existing app and games?