iPhone hardware developer Imagination Technologies saw its share price crash by over 60 per cent after Apple announced that it would end a deal to use its products.
Imagination Technologies’ relationship with Apple dates back over ten years, with the Hertfordshire-based firm creating, among other things, graphic processing units (GPUs) which are key elements in products such as Apple’s iPhones, iPads, watches and TVs.
Imagination’s share price fell from 179.4p to to 88.9p on Monday 3 April, wiping £510 million from the company’s value in just a few seconds of trading.
What does the tech actually do?
The GPU sits alongside the central processing unit (CPU) at the core of any smartphone’s technology.
They allow high quality images and high-definition videos to be displayed on sharper and larger screens. They are an essential component of Apple’s trademark Retina display technology.
What’s next for iPhone chips?
Imagination Technologies revealed the US giant’s plan to stop licensing graphics technology and its plan to instead develop the function in-house.
However there were doubts as to whether Apple could do this without infringing on Imagination’s patents.
The firm said in a statement:
"Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination’s technology, without violating Imagination’s patents, intellectual property and confidential information."-
Is Apple’s move a hardball ruse?
According to investment bank Jeffries, there is a chance that Apple, who already own a 8.2% stake in Imagination, could be planning to acquire the chip manufacturer.
Apple admitted that they were looking to buy the British outfit last year but did not make an offer.
Apple, who are the UK firm’s biggest customer and responsible for over half of the company’s £120 million revenue last year, said they would be looking to end relations with the British firm in the next 15-24 months.
This will come as another huge blow to the company which posted its biggest loss in 2016, down £61.5 million.
This caused Imagination to carry out a £12.5 million cost-slashing exercise which included losing CEO Sir Hossein Yassaie as well as cutting over 200 jobs. The latest news will cast doubts on a further 1,200 jobs.