Apple deals blow to Imagination

The British company that designs the iPhone's graphics was dealt a huge blow Monday when Apple said it would stop using the firm's technology within the next two years.

Shares in Imagination Tech dropped by a staggering 69 percent after its biggest customer announced it was developing its own independent graphics processing chips, which would reduce its reliance on the British firm.

Imagination has been licensing its processing designs to Apple, receiving a small royalty on every graphics chip used in an iPhone, iPad and Apple Watch.

Patent violations in sight?

Apple paid the British company license fees and royalties totaling 60.7 million pounds ($76 million, 71.3 million euros) for the fiscal year ending April 2016, accounting for half of its total revenue.

It's expected to pay about 65 million pounds for this year. Imagination said Monday it doubted that Apple could go it alone without violating its patents, intellectual property and confidential information.

Apple has been quietly hiring Imagination staff amid plans to develop its own graphics technology.

Since Apple wants to introduce its own technology in 15 months to two years' time, analysts believe it will use it first in next year's new iPhone, likely to be released in September 2018.

hg/jd (Reuters, The Telegraph)