Chip designer Imagination Technologies (LON: IMG) has put itself up for sale following a dispute with its largest customer, Apple. The company designs the graphics processors used in smartphones and other devices; it suffered a major blow in April when Apple pulled the plug on its chip supply deal, with effect from around 2019. Imagination shares traded at around 268p before the announcement and declined a whopping 70% on the day of the news.
The company has been trying to sell its MIPS and Ensigma businesses since to shore up its finances, which led to interest from a number of parties for a potential acquisition of the whole group.
The news highlights how the dependency can become crippling if Apple chooses to change suppliers, or, as in this case, seek to develop the technology in-house. And Imagination wouldn't be the first to feel the heat from getting the cold shoulder from Apple.
In 2015, GT Advanced Technologies filed for bankruptcy just a year after signing a contract with Apple, alleging that the tech giant's meddling and changes of specifications led to the company’s demise. Audio chipmaker Wolfson reportedly lost Apple as a customer in 2008, which led to five years of operating losses before the company was bought by Cirrus.
Imagination’s shares closed up 16.4% following Thursday's announcement to sell the business. Elsewhere, the company has reportedly begun a dispute resolution process with Apple, having previously expressed doubts that the tech behemoth could build a new GPU architecture without violating Imagination’s patents and IP.
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