Apple struck a new deal with chipmaker Imagination, the iPhone supplier it once almost crushed (AAPL)


Tim Cook

  • Apple has reached an agreement with one of its former chipmakers, a British firm called Imagination, ending months of spats between the two firms and Apple poaching Imagination staff.
  • In a brief statement on its website, Imagination said it has agreed to “a new, multi-year license agreement under which Apple has access to a wider range of Imagination’s intellectual property in exchange for license fees.”
  • Imagination was forced to put itself up for sale in 2017 after Apple warned the firm it would no longer be using its chips, sending the chipmaker’s stock price tumbling and forcing it to seek acquisition.
  • Business Insider has approached both Apple and Imagination for comment.
  • Visit Business Insider’s homepage for more stories.

One of the bitterest company disputes in Silicon Valley’s recent history has ended.

On Thursday, a chip supplier to Apple – a British tech firm called Imagination Technologies – announced that it had reached a “new, multi-year license agreement” with Apple to access an unspecified range of its intellectual property, ending years of sparring between the two firms.

Imagination had previously received royalty payments from Apple because the tech giant used its graphics processing unit (GPU) designs for its iPhones and iPads. This was thanks to a deal that Imagination says was first struck in 2014.

The deal – which reportedly that Imagination received approximately 30 cents from Apple for every device sold that used its chip design – generated roughly half of Imagination’s entire annual revenue.

But in April 2017, Apple warned the firm it would no longer be using its designs, and would instead transition towards using its own. The announcement sent the chipmaker’s stock price tumbling by an estimated 70%.

In May 2017, Imagination filed a formal dispute with Apple over the lost deal – prompting Apple to described Imagination’s characterization of the situation as “misleading.” With its main revenue stream in jeopardy, and with Apple having poached key Imagination employees to build out its in-house team as early as 2016, Imagination was forced to put itself up for sale in June 2017.

With the situation still at an impasse by September, Imagination was suddenly bought for £550 million ($742.5 million) by a Silicon Valley-based private equity firm, Canyon Bridge, which is backed by the Chinese government. Though the deal bolstered Imagination’s share price, it had still not resolved its dispute with Apple – that’s until today’s denouement.

Imagination’s chief marketing officer, David Harold, told Business Insider he couldn’t give details on the Apple deal, but said: “I think it’s one of several things Imagination has to feel good about as we head into 2020. We feel resurgent. Great new leadership, some excellent new senior talent, a groundswell of engagement in China, the launch of our best GPU ever to date in A-Series, and the industry starting to understand the value of ray tracing. And we’re excited about new opportunities in the coming year.”

Business Insider has contacted Apple for comment.

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