Apple in 'advanced talks' to buy Imagination Tech

March 22, 2016 // 11:37 a.m.

Tags: #apple #caustic #dreamcast #imagination #imagination-technologies #pa-semi #powervr #ray-tracing #rumour #semiconductor #videologic

Apple, which last night announced its new iPhone SE and smaller iPad Pro devices, is reportedly in 'advanced talks' to acquire Imagination Technologies to further boost its in-house semiconductor efforts.

Having made a name for itself producing the graphics hardware for Sega's ill-fated Dreamcast console, the UK-based Imagination Technologies - formerly known as VideoLogic - carved out a very profitable niche putting its patented graphics technologies to work in the embedded and mobile sectors. In recent years, however, the company's fortunes have turned: in February its chief executive officer stepped down as the company sought to restructure, and it has been slowly working to break into new markets with the launch of maker-friendly single-board computers and the promise of real-time ray-tracing for games which can scale from mobile devices right up to desktop machines without the expense of its current Caustic family of accelerator boards.

With its finances not expected to improve in the short term and on the back of an anouncement that it would lay off 20 per cent of its workforce - some 350 people - Imagination is reported by Ars Technica to be in 'advanced talks' with one of its biggest customers: Apple, which uses PowerVR hardware in its iPhone, iPod, and iPad product ranges. Responding to the site's request for comment, Imagination - already part-owned by Apple at 9.5 per cent - refused to either confirm or deny the report.

For the cash-rich Apple, the move makes sense: a large portion of its profits come from the mobile arena, and the company has long been looking to bring its semiconductor design in-house. In December last year the company acquired a small semiconductor fab in San Jose, its first production facility, has hired numerous former AMD staffers including embedded specialist Jim Mergard, and back in 2008 acquired the fabless Palo Alto Semiconductor to help it design its A-family of ARM-based system-on-chip (SoC) parts rather than using off-the-shelf designs.

UPDATE 2016-03-23:
In an unusual move Apple has confirmed that it has been in talks with Imagination Technologies regarding an acquisition, but has stated firmly that the talks have been abandoned and no such deal is to take place in the immediate future. 'From time to time, Apple talks with companies about potential acquisitions,' the company explained in a statement via the London Stock Exchange (LSE). 'We had some discussions with Imagination, but we do not plan to make an offer for the company at this time.'
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