Apple has been using British chip designer, Imagination Technologies’ Power VR graphics processor. Imagination released a statement for its stakeholders on Monday stating that the company responsible for half of its annual sales is intending to make its own graphics processor.
The mass sell-off of Imagination’s shares after this statement destroyed almost two-thirds of its market value. This has led to an existential crisis for the company as the stock values are at their lowest point since 2009.
The company has tried to calm its stakeholders by saying that they are still in talks with Apple for a new Royalty agreement as they could offer their expertise in the designs. Apple’s novice status in making any processor, could lead them into taking the deal, but Imagination’s foundation seems to be on shaky grounds and it won’t change unless there is an affirmative from the California giant.
The other side of this fallout is that this could well lead to legal repercussions. Imagination will still hold its rights to the patents relating to the PowerVR processor.
However a win in court for Imagination will not lead to a long term fix as it will need to attract more customers.
Imagination’s other big customer is Samsung. Its dependence on the big ones is proving to be a nail in the side as it does not enjoy the luxury of a comfort zone anymore. Even a small pitfall from here could lead to a complete shutdown of operations.
The Hertfordshire-based company may now be on the lookout to salvage something from this mess, but the future looks very meek at this moment.
This downfall even after a strong previous year has done a huge damage, already.