Company / division: Imagination Tech
Imagination Tech Announces Sale to Chinese-Backed Canyon Bridge (Sep 22, 2017)
Imagination Technologies, whose GPUs Apple said it would soon stop using back in April, prompting a massive selloff in the stock and a decision to explore strategic options, has announced that it’s agreed to sell most of its business to a Chinese-backed private equity firm, Canyon Bridge, with Silicon Valley investment fund Tallwood Partners buying the MIPS business it had previously said it might sell separately. Apple, of course, announced a GPU designed in-house at last week’s iPhone event, which means its abandonment of Imagination Tech as a chip supplier is going even more quickly than we might have thought. Since April, the story of Imagination has been a cautionary tale about what a double-edged sword being an Apple supplier is – on the one hand, a huge boon to your business, and on the other hand a massive risk that it someday pulls the plug because it’s found an alternative supplier or simply decided it can do things itself. It’s good to see Imagination find a way out, but the acquisition price of 182 pence per share, a significant premium over its recent share price, is still way below its high of 291.50 right before the Apple news came out.
Apple Disputes Imagination Tech Account of Unwinding of Relationship (Jul 7, 2017)
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Imagination Tech Begins Formal Sale Process as a Result of Apple Pullout (Jun 22, 2017)
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Imagination Technologies Looks to Escalate Patent Argument with Apple (May 4, 2017)
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Apple GPU Supplier Imagination Tech Says Apple Plans to Build its Own GPU in 1-2 Years (Apr 3, 2017)
This already feels likely to be one of the biggest news items of the week (incidentally, you can now use the Like button below to vote for this post if you agree – the posts that get the most votes are more likely to be included in my News Roundup Podcast at the end of the week). There have been ongoing reports that Apple would like to build more of its own in-house technology, and GPUs have seemed at least a candidate given that Apple was said for a while to be mulling an acquisition of the company, and has been bringing Imagination Tech employees on board since the deal didn’t go ahead. The GPU obviously has a number of existing applications, but GPU technology has increasingly been used for AI and machine learning, so that’s an obvious future direction, along with Apple’s reported investment in AR. Apple’s ownership of its A-series chips (and increasingly other chips like its M and W series) is a key source of competitive advantage, and the deeper it gets into other chip categories, the more it’s likely to extend that advantage in these areas. This is, of course, also a unique example of Apple making a direct statement about a future strategy (albeit via a third party): as Apple is IMG’s largest customer, it had to disclose the guidance from Apple because it’s so material to its future prospects – the company’s share price has dropped 62% as of when I’m writing this.