Apple strikes deal with UK chipmaker two years after snub

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Apple used to license Imagination’s graphics chip designs for use in iPhones and iPads, but moved to its own designs in 2017. Photo: Budrul Chukrut/SOPA Images/LightRocket via Getty Images

Apple (AAPL) has signed a deal with UK chipmaker Imagination Technologies, two years after the Californian technology giant sidelined the company.

Imagination announced Thursday it had signed a “multi-year license agreement” with Apple for its intellectual property. It didn’t specify what technology Apple would be licensing, saying only the iPhone maker would have “access to a wider range of Imagination’s intellectual property in exchange for license fees.”

Imagination designs microchips that can be used for computing, artificial intelligence, machine vision, and graphics.

The deal with Apple comes two years after the tech giant ditched Imagination as a supplier, sending its share price into turmoil.

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Apple used to license Imagination’s graphics chip designs for use in iPhones and iPads, but moved to its own designs in 2017. Apple was Imagination’s biggest customer, accounting for around half its revenues, and the news Apple was going it alone sent Imagination’s share price crashing over 70%.

Hertfordshire-based Imagination, which employs over 500 people, was sold to Chinese private equity group Canyon Bridge Capital Partners for £500m shortly after the share price collapse.

Accounts filed with Companies House show Imagination’s revenue rose 9% to £86.4m in 2018, the most recent period accounts are available for. Imagination made a pre-tax profit of £1m for the year, bouncing back from a £43.7m loss in 2017.

Imagination said in its accounts, filed in August 2019, that it had received “significant support” from Canyon Bridge Capital and flagged that talks with Apple were ongoing.

“Products based on Imagination IP are used by billions of people across the globe in their phones, cars, homes, and workplaces,” Imagination said in Thursday’s statement.