UK Edition
Imagination Technologies accuses Apple of unethical behaviour in chip dispute
Imagination Technologies has accused Apple of breaching its own ethics as the dispute between the British microchip company and its biggest customer turns increasingly bitter.
The Hertfordshire based group, which was ditched by Apple in April after the Silicon Valley giant said it would take the graphics technology in-house, said talks on resolving the stand-off between the two had stalled and suggested legal action could be a further step.
Apple has relied on Imagination’s designs for the graphics chips that power the iPhone and iPad for years and Apple accounts for around half of Imagination’s sales.
Imagination disputes that Apple will be able to design its own chips without paying for access to the British company’s intellectual property and has put itself up for sale, with analysts saying the company may struggle to survive without further payments.
On Tuesday, Imagination’s chief executive Andrew Heath said Apple’s claims that the iPhone maker would no longer need to pay royalties were “unsubstantiated” and labelled Apple’s actions unacceptable.
“We do not believe this to be acceptable business practice nor in line with Apple’s own ethics statements regarding suppliers.”
He said there had been “no progress” on a contract dispute Imagination has opened and that it is reviewing its options, suggesting legal action is a prospect.
Apple plans to create its own designs and has hired dozens of graphics experts from Imagination as part of plans to design its own chips.
The British company’s full-year results, published on Tuesday, showed that there may be life after Apple. It revealed a £2.4m pre-tax profit, against a £29.4m loss the prior year, and adjusted operating profits, which strip out the effects of recent restructuring, trebled to £29.2m. Revenues rose 19pc to £145.2m thanks to a string of new contracts agreed in the last year and the weaker pound.
Imagination’s shares rose by 6.5pc. They had collapsed in April when the company confirmed that Apple planned to end its relationship in the next two years but have recovered after Imagination put it up for sale in June. The company says it is in “preliminary discussions” with possible bidders, and analysts tout Intel, Qualcomm and ARM Holdings as potential owners.
“Without Apple I find it hard to see how it survives as a viable business,” said Oliver Knott, an analyst at N+1 Singer. He said failing to resolve the dispute would make it difficult for Imagination to sign up more customers in future.
Apple did not comment.