Imagination Technologies Accuses Apple of Unethical Behaviour in Chip Dispute

Dispute Between Apple & Imagination Technology

Apple has been accused by Imagination Technology for breaking its own ethics as the clash between the British microchip company and its biggest customers have turned very bitter. The Hertfordshire founded group that had been abandoned in April by Apple after the Silicon Valley giant had stated that it would be taking the graphics technology in-house, informed that talks on determining the standstill between the two had stalled and recommended legal action would be the next step.

Apple had depended on the designs of Imagination for the graphics chip which tends to power the iPhone as well as the iPad for years and Apple accounts for almost half of the sales of Imagination. The dispute of Imagination is that Apple would be capable of designing its own chips without paying for access to the intellectual property of the British company and has put itself for sale with analyst stating that the company may combat to survive without further payments.

 Recently the chief executive of Imagination, Andrew Heath had informed that Apple’s claims that the maker of iPhone would no longer need to pay royalties that were `unsubstantiated’ and has labelled the actions of Apple as unacceptable.

Contract Dispute

He further commented that they do not believe that this is an acceptable business practice nor in line with the ethics statements of Apple considering suppliers. He also mentioned that there had been `no progress’ with regards to the contract dispute that Imagination had opened and that it is revising its options, signifying legal action as a prospect. The full-year results of the British company had been published recently indicating that there could be life after Apple.

It also exposed a pre-tax profit of £2.4m against a £29.4m loss the previous year and adjusted operating profits, which shred out the effects of recent rearrangement, increased to £29.2m. The revenues increased 19% to £145.2 due to a series of new contracts approved last year together with the weaker pound. The shares of Imagination had increased by 6.5% and had dropped in April when the company had confirmed that Apple intended to terminate its relationship in the next two years.

However it had recovered after Imagination had put it up for sale in June. The company had informed that it is in initial discussions with probable bidders and analysts vender such as Intel, Qualcomm and ARM Holdings as the potential owners.

Imagination – Big GPU Designers

Oliver Knott, an analyst at N+1 Singer had commented that `without Apple it was difficult to see how it survived as a viable business. He informed that failing to resolve the dispute would make it difficult for Imagination in signing up more customers in the near future.

Apple had refrained from commenting. Imagination had been one of the big GPU designers in the smartphone industry together with another British group – ARM Holdings, and America’s Qualcomm. Smartphones usually tend to have two processors, the brains which are at the core of the functions of the device, the central processing unit – CPU and graphics processing unit – GPU.

 Though the CPU is devoted to the number munching which runs the application, the GPU is said to be responsible in creating images and videos. In the case of smartphones, more commanding GPUs tend to be very important in the midst of the rise of sharper as well as superior screens together with higher-definition video.

Apple is said to be equally exclusive among smartphone manufacturers in which it builds the microchip utilised in its iPhone though it does not make them from scratch. It warrants the powerVR GPU technology from Imagination in its processors.

3D-Sensing Camera – Augmented Reality Technology

Apple has been paying Imagination a royalty for this on every iPhone, iPad, iPod, Apple Watch as well as AppleTV it tends to sell. Considering that Apple is said to be the biggest smartphone, tablet and smartwatch maker by volumes and profits in the world, the same has been an extremely profitable relationship for Imagination.

The revenue for Imagination from Apple had been £60.7m just over half of its total sales and it had been expected to be £65m this year. Moreover Apple also had an 8% stake in Imagination and had reflected on purchasing the company outright at one point of time. Imagination had been informed by Apple that it intended in developing its own GPU technology, putting an end to the use of the technology of Imagination.

 It plans to do so in 15 months to two years’ time, in line with the anticipated time scale for the next one iPhone probably to be released in September 2018. GPUs are significant in the working of the camera and its function and reports propose that Apple has been working on a 3D-sensing camera for augmented reality technology, something which will need an increase in graphics processing power.

Moreover GPUs tend to also be critical to machine learning technology like speech and image recognition. Apple which tends to do more data processing on the device than its rivals, requires a high-powered processor for this purpose, for privacy reasons.