Imagination Technologies opens dispute with Apple over iPhone chip

iPhone

Imagination’s graphics technology powers the iPhone CREDIT: AFP

Imagination Technologies has opened a dispute with Apple over the tech giant’s use of its technology in the iPhone after the two sides were unable to come to an agreement.

The British graphics chip designer said it had “commenced the dispute resolution procedure” and hoped to reach a new deal when Apple ditches its contract between the two.

Imagination also revealed it is selling two of its three major businesses in an effort to shore up cash.

The company was thrown into turmoil last month when it revealed that Apple planned to stop using its technology, which features in every iPhone and iPad, within the next two years, in order to build its own.

Imagination, which relies on the iPhone maker for half of its revenues, said it did not believe Apple was able to do so without using Imagination’s technology in some form, and said it hoped to reach an amicable agreement going forward.

On Thursday, it said it had “been unable to make satisfactory progress with Apple to date regarding alternative commercial agreements” and hoped to reach a deal “through a more structured process”.

The dispute does not involve legal action but is the formal process for reaching an agreement under the contract between the two companies.

“Imagination has been unable to make satisfactory progress with Apple to date regarding alternative commercial arrangements for the current licence and royalty agreement,” it said.

“Imagination has therefore commenced the dispute resolution procedure under the licence agreement with a view to reaching an agreement through a more structured process. Imagination has reserved all its rights in respect of Apple’s unauthorised use of Imagination’s confidential information and Imagination’s intellectual property rights.”

However, in a sign that the company will be massively disrupted by its dispute with Apple, it is breaking itself up, selling two of its three core businesses to focus on the graphics chip division.

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Its MIPS processor design and Ensigma connectivity divisions accounted for £21m of its £73.5m in total revenue in the six months to October 31. Imagination said it wanted to focus on PowerVR, the graphics technology that is used in the iPhone as well as a number of other smartphones and gadgets.

“While the Group has continued to invest in its MIPS and Ensigma businesses, it has now decided to actively market these businesses for sale, concentrate its resources on PowerVR and strengthen Imagination’s balance sheet,” it said.

Analysts had expected a break-up if Imagination’s relationship with Apple was thrown into doubt.

Shares in Imagination were flat in early trading.

[“Source-telegraph”]