As part of the announcement, the board has declared that it will not be publicly identifying bidders for the company. It also made clear that there was no guarantee that any offer would be formally made, nor are there any obligation to accept any offer.
Imagination is the creator of mobile graphics processing architectures, most notably its PowerVR architecture, which is used in a number of smartphones, tablets, and other compact devices. Apple uses the company’s architecture in many of its products, including iPhones, iPads, the Apple TV, Apple Watch, and iPods.
Apple’s declaration in April that it would stop using Imagination’s intellectual property within two years means a significant reduction in revenue for Imagination, as it will not be eligible for royalty payments under the current license and royalty agreement. Apple’s license fees and royalties represented revenue of $75.8 million for the 2015-2016 financial year, and rose to approximately $81 million for the fiscal year that ended on April 2017.
The UK firm’s shares plunged in value by more than 60 percent in the immediate wake of the announcement, and 70 percent to date.
Apple was said to be in talks to acquire Imagination early last year, though ultimately no such deal was made. Apple has asserted that it has been “working on a separate, independent graphics design in order to control its products.”
Apple has also taken time to poach a number of Imagination’s staff over the last two years, including GPU architects and designers. These employees could help Apple to produce its own graphics architecture, potentially saving it from having to pay royalty fees to other companies to license any GPU technology.
Imagination also implies in Thursday’s statement there could be a legal fight in the future over the in-house graphics architecture move. The company has declared in the past that 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.
While evidence has been requested by Imagination, Apple has declined to provide any to the company, and has reportedly not accepted overtures from Imagination for potential alternative commercial arrangements.