No Imagination: UK Chip Biz Goes Up for Sale

Potential bidders for the company could include Qualcomm, Intel and Apple itself.

Iain Morris, International Editor

June 22, 2017

2 Min Read
No Imagination: UK Chip Biz Goes Up for Sale

UK chip designer Imagination Technologies has put itself up for sale just weeks after iPhone maker Apple said it would stop using the company's technology. (See Eurobites: UK UBB Providers Cry Foul Over 'Phony Fiber'.)

Imagination Technologies Group plc said it had decided to begin a formal sale process after a number of parties expressed interest in buying it.

It had already put its MIPS and Ensigma operations up for sale and also said today that it has received "indicative proposals" for both of those businesses.

The MIPS processors are aimed largely at supporting autonomous vehicle technologies, while Ensigma focuses on wireless connectivity as well as the broadcasting sector.

The company remains locked in a dispute with Apple, which accounts for about half of Imagination's revenues but announced in April that it would stop using Imagination within two years. (See Eurobites: Imagination Rocked by Apple Shut-Out.)

Imagination has argued that Apple Inc. (Nasdaq: AAPL) will struggle to develop its own chip technology for iPhones, iPads and iPods without intruding on its intellectual property.

It kicked off legal proceedings over license payments last month.

Potential bidders for Imagination could include Qualcomm, Intel and Apple, which currently owns an 8% stake in the business.

Qualcomm Inc. (Nasdaq: QCOM) is involved in its own bitter intellectual property dispute with Apple and might regard a takeover of Imagination as a source of ammunition in that battle. (See Qualcomm Blasts Apple for Disrupting Deals in Legal Dispute.)

Although Apple appeared to rule out a takeover of Imagination last year, it could decide otherwise simply to keep Imagination out of Qualcomm's hands.

Intel Corp. (Nasdaq: INTC) could be attracted in particular to Imagination's MIPS business given its growing interest in autonomous vehicles. (See Intel Buying Mobileye for $15 Billion.)

For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.

Imagination's share price lost more than 60% of its value on the London Stock Exchange following Apple's announcement in April, falling to just £1.03 ($1.30, at today's exchange rate).

Shares were boosted by today's news, however, and trading up 17%, at about £1.45 ($1.84), at the time of publication.

Imagination made revenues of £64.4 million ($81.5 million) in the six months to October 2016, an increase of 6% on sales in the year-earlier period.

It also swung from an operating loss of £5.5 million ($7 million) to a profit of about £2.9 million ($3.7 million) over the same period.

Net losses including discontinued operations came in at £10.1 million ($12.8 million), down from £20.8 million ($26.3 million) a year earlier.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

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About the Author(s)

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

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