Imagination Tech Up For Sale After Apple Disconnect, Possibly Ripe For Intel Acquisition
It has been a rough few months for Imagination Technologies, the British-based semiconductor company that was founded over three decades ago as VideoLogic. Shares of the company recently tumbled after it was announced by Apple, by far the company's biggest customer, that it planned to design its own mobile GPU cores moving forward. Now Imagination is up for sale and it could be Intel that swoops in.
Imagination said it has been contacted by a "number of parties" inquiring about a potential acquisition of the entire company. No deal is imminent, but in light of the interest—and the fact that Apple is venturing out on its own—Imagination has decided to officially list itself for sale. The company is currently in preliminary talks with potential bidders, though Imagination did not say which ones.
Image Source: Intel
"There can be no certainty that any offer will be made for Imagination, nor that any transaction will be executed, nor as to terms of any such offer or transaction," Imagination cautioned. "Parties interested in participating in the formal sale process will be required to enter into a confidentiality agreement with the Company on reasonable terms satisfactory to the board of Imagination before being permitted to participate in the process and to receive information."
Even though a sale is not guaranteed to happen, it would not be shocking if Intel ended up acquiring Imagination. Intel actually owns a bigger share of the PC graphics market than either AMD or NVIDIA, which is attributable to the integrated graphics on most of its modern day processors. It is not clear where Intel is currently licensing its graphics cores from, though in the past it has tapped Imagination to power the graphics on its Atom processors, specifically its Moorefield chips (PDF).
More recently it was rumored that Intel had inked a licensing deal with AMD to use its graphics technology. It is a rumor that pops up every so often, though this time Intel stated in no uncertain terms that the rumors were simply "untrue." In doing so, Intel pretty much dashed any hopes of AMD's Vega GPU architecture getting integrated into its Kaby Lake (or later) CPU architectures.
None of this means it is a foregone conclusion that Intel will make an offering for Imagination. Intel at one point owned a nearly 5 percent stake in the company, but sold off its shares a little over two years ago. But if Intel is not interested, then which company might ultimately end up buying Imagination? Perhaps Apple, which has been linked to buyout rumors before.
There might be some regulatory rules that would prevent such a thing, but assuming Apple can maneuver through them, it would be pretty savvy (and ruthless) to pull its business from Imagination, watch the company's value plummet, then jump in with a buyout offer. The argument against such a move is that Apple has its own design team, though several of its employees were poached from Imagination. On top of that, Imagination recently went on record saying Apple would not be able to build its own GPU without infringing on the company's graphics IP.
"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. This evidence has been requested by Imagination but Apple has declined to provide it," Imagination said.
"Further, Imagination believes that it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights, accordingly Imagination does not accept Apple’s assertions," the company added.
That amounts to a not-so-veiled threat at a lawsuit if and when Apple develops its own GPU. In the meantime, Imagination made it clear to potential suitors that it "remains in dispute with Apple," which is a way of saying it will not accept low ball offers.
Thumbnail Image Source: Imagination Technologies (PDF)
Imagination said it has been contacted by a "number of parties" inquiring about a potential acquisition of the entire company. No deal is imminent, but in light of the interest—and the fact that Apple is venturing out on its own—Imagination has decided to officially list itself for sale. The company is currently in preliminary talks with potential bidders, though Imagination did not say which ones.
Image Source: Intel
"There can be no certainty that any offer will be made for Imagination, nor that any transaction will be executed, nor as to terms of any such offer or transaction," Imagination cautioned. "Parties interested in participating in the formal sale process will be required to enter into a confidentiality agreement with the Company on reasonable terms satisfactory to the board of Imagination before being permitted to participate in the process and to receive information."
Even though a sale is not guaranteed to happen, it would not be shocking if Intel ended up acquiring Imagination. Intel actually owns a bigger share of the PC graphics market than either AMD or NVIDIA, which is attributable to the integrated graphics on most of its modern day processors. It is not clear where Intel is currently licensing its graphics cores from, though in the past it has tapped Imagination to power the graphics on its Atom processors, specifically its Moorefield chips (PDF).
More recently it was rumored that Intel had inked a licensing deal with AMD to use its graphics technology. It is a rumor that pops up every so often, though this time Intel stated in no uncertain terms that the rumors were simply "untrue." In doing so, Intel pretty much dashed any hopes of AMD's Vega GPU architecture getting integrated into its Kaby Lake (or later) CPU architectures.
None of this means it is a foregone conclusion that Intel will make an offering for Imagination. Intel at one point owned a nearly 5 percent stake in the company, but sold off its shares a little over two years ago. But if Intel is not interested, then which company might ultimately end up buying Imagination? Perhaps Apple, which has been linked to buyout rumors before.
There might be some regulatory rules that would prevent such a thing, but assuming Apple can maneuver through them, it would be pretty savvy (and ruthless) to pull its business from Imagination, watch the company's value plummet, then jump in with a buyout offer. The argument against such a move is that Apple has its own design team, though several of its employees were poached from Imagination. On top of that, Imagination recently went on record saying Apple would not be able to build its own GPU without infringing on the company's graphics IP.
"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. This evidence has been requested by Imagination but Apple has declined to provide it," Imagination said.
"Further, Imagination believes that it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights, accordingly Imagination does not accept Apple’s assertions," the company added.
That amounts to a not-so-veiled threat at a lawsuit if and when Apple develops its own GPU. In the meantime, Imagination made it clear to potential suitors that it "remains in dispute with Apple," which is a way of saying it will not accept low ball offers.
Thumbnail Image Source: Imagination Technologies (PDF)
