Apple’s Wounded Ex-Supplier Enters Dispute Resolution

Apple's Wounded Ex-Supplier Enters Dispute Resolution

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British company Imagination Technologies said on Thursday that it will enter into dispute resolution with Apple in the wake of an announced split between the two companies. Additionally, the UK-based chip manufacturer is also planning on selling off some of its subsidiary businesses.

According to the chip maker’s press release, “Imagination has been unable to make satisfactory progress with Apple to date regarding alternative commercial arrangement for the current license and royalty agreement.” Per that license agreement, Imagination is now entering into the dispute resolution process with the Cupertino tech giant, alleging that Apple had used their intellectual property without permission. Imagination doesn’t believe that Apple can design its own chipsets without infringing on its patents, so the company is moving to get licensing revenue from Apple — even if the tech giant stops using Imagination’s own chip technology in the future, TechCrunch reported.

The split-up is undoubtedly taking its toll on Imagination, as Apple accounted for nearly 50 percent of the chip maker’s total revenue. Notably, Imagination’s shares plummeted following the announcement — and the company’s stock price has yet to recover. In today’s announcement, the company said it was selling off two of its businesses, MIPS and Ensigma, to “strengthen” its balance sheet and consolidate its focus on its GPU division.

The British firm is best known for its PowerVR graphics processing architecture, which Apple has used in a variety of devices from the iPhone and Apple Watch to the Apple TV. Even without Apple, PowerVR “continues to address attractive growth markets.” And it’s well positioned in a variety of markets, including AR/VR and artificial intelligence, the company said.

Apple has been increasingly moving toward self-reliance in its supply chain, and is focusing on developing its own proprietary chip technologies — the idea being that Apple can’t risk relying on third-parties for integral parts of its devices. But by severing ties with several former suppliers, the company has certainly ruffled feathers in the industry. The recent licensing dispute and resulting legal battle between Apple and Qualcomm, for example.

The results of this dispute process are critical for Imagination’s future livelihood. Although Cupertino is likely to take years to develop its own GPU design, losing a customer as big as Apple doesn’t bode well for any company. And even if Imagination manages to survive the break-up, it’s likely to lose its place as a premium supplier, Engadget points out.

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