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Apple today hit back at disgruntled chipmaker Imagination Technologies for questioning whether it can develop new graphics technology without using the supplier's intellectual property, calling the British firm's response to Apple's decision to part ways with it "disappointing, inaccurate, and misleading."

Back in April, Imagination Technologies announced that Apple had told the U.K. firm it planned to stop using its graphics processors in consumer devices over the next two years. The news came as a shock to investors and the company's shares fell by 60 percent on the day.

imagination_technologies_logo.jpg

At the same time, the company criticized Apple, claiming that it doubted the tech giant could go it alone without violating Imagination's patents, intellectual property, and confidential information. One month later, the company opened a "dispute resolution procedure" with Apple after failing to resolve the disagreement.

On Friday, Apple responded to the graphics chip supplier by claiming that the firm had known for nearly two years that it was winding down the relationship. In an email statement received by Bloomberg, Apple said it first informed Imagination in late 2015 that it would no longer be buying the U.K. company's latest technology, but that it would still use its older systems.

Apple claimed that it told Imagination in 2016 that it was further reducing the relationship by initiating a clause in its contract that allows Apple to pay a lower royalty rate for using a smaller amount of intellectual property. By February 2017, Apple said it had told Imagination it was ending the relationship altogether and would no longer be making any royalty payments in up to two years' time.

Apple's statement contradicts those made by Imagination, notes Bloomberg. Last week, Imagination CEO Andrew Heath said the company was informed by Apple at the end of March "that they were certain" that products to be released in 2018 or early 2019 will no longer use Imagination's intellectual property. But Apple claimed the firm had known for longer.
"We began working with Imagination in 2007 and stopped accepting new IP from them in 2015," Apple said. "After lengthy discussions we advised them on February 9 that we expected to wind down our licensing agreement since we need unique and differentiating IP for our products. We valued our past relationship and wanted to give them as much notice as possible to adapt their future plans."
Imagination has yet to comment on Apple's statement, but the supplier's shares fell by up to 8 percent on Friday U.K. trading.

News that Apple would no longer be relying on its processors delivered a major blow to Imagination Technologies, which traditionally provides the PowerVR graphics architecture found in Apple's full range of iOS devices and receives a small royalty on every sale, which amounts to up to half of the British firm's revenue.

The company put itself up for sale in June. The formal sale process is still ongoing, despite a successful restructuring and a return to profitability for the company. Apple is unlikely to make an offer, according to a person familiar with the matter who spoke to Bloomberg.

Article Link: Apple Hits Back at Supplier Imagination for 'Inaccurate and Misleading' Statements in Contract Dispute
 
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Avieshek

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Two years is good time and still another two more years given. Why companies wind up over-dramatical against Apple? Like they have to think up something cheap and emotional after involving business with Apple.

Samsung seems like a hell more angelic than Qualcomm or GT Advanced and now, this latest example.

No wonder, tech have Stagnated 20yrs with Windows era.
 
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Quu

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Why most companies wind up overacting against Apple?

Apple is the kind of company that only uses you long enough to learn how your technology works and then once they devise a way to get around your patents, shut you out and replicate the functionality of your solution. Alternatively they just buy you. Like they did with Siri, TouchID and so on.

EDIT:// I can see I rattled a lot of cages with this comment. Many of you replying are saying things like "welcome to capitalism" and "that's what every company does". And to that I say, well duh, that's what I just explained with my comment, it's the entire reason imagination is salty.
 
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justperry

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Two years is good time and still another two more years given. Why most companies wind up overacting against Apple?

Have you seen the contracts, no, so you don't know who is right or wrong.

Apple is the kind of company that only uses you long enough to learn how your technology works and then once they devise a way to get around your patents, shut you out and replicate the functionality of your solution.

Link please to prove above statement.

Alternatively they just buy you. Like they did with Siri, TouchID and so on.

What's wrong with that?
 
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Avieshek

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Apple is the kind of company that only uses you long enough to learn how your technology works and then once they devise a way to get around your patents, shut you out and replicate the functionality of your solution. Alternatively they just buy you. Like they did with Siri, TouchID and so on.
Then, Samsung is made for Apple.
 
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AdonisSMU

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Apple is the kind of company that only uses you long enough to learn how your technology works and then once they devise a way to get around your patents, shut you out and replicate the functionality of your solution. Alternatively they just buy you. Like they did with Siri, TouchID and so on.
Everyone does that if they can and it makes financial sense to after a certain amount of time has passed. I don't think Apple would build a whole new team in house that does what Imagination does as it is so much more expensive and risky to do.

Imagination wasn't developing the technology Apple needed to move forward. Why shouldn't they move on?
 
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mi7chy

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There must be something going on at Apple for them to suddenly screw over or not pay their core suppliers for GPU (Imagination), radio baseband (Qualcomm), power management (Dialog), etc.
 
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Avieshek

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There must be something going on at Apple for them to suddenly screw over or not pay their core suppliers for GPU (Imagination), radio baseband (Qualcomm), power management (Dialogic), etc.
They may have developed one integrated chip that includes them all. In-house. A few years ago, around 2015, there was an article regarding that I read from PatentlyApple.
 
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GrumpyMom

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Speaking from a position of complete ignorance and lack of understanding here, why did this company make this dramatic announcement that ended up shocking investors and hurting their share value? That decision seems counter to their interests.

Is there a larger strategic advantage to such an announcement that I'm overlooking? Was it required by law?
 
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Avieshek

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Speaking from a position of complete ignorance and lack of understanding here, why did this company make this dramatic announcement that ended up shocking investors and hurting their share value? That decision seems counter to their interests.

Is there a larger strategic advantage to such an announcement that I'm overlooking? Was it required by law?
To the likes of possibility for Samsung, Qualcomm or Google buying them. Something from Apple is a concerned interest for it's competitors, right?
 
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recoil80

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Speaking from a position of complete ignorance and lack of understanding here, why did this company make this dramatic announcement that ended up shocking investors and hurting their share value? That decision seems counter to their interests.

Is there a larger strategic advantage to such an announcement that I'm overlooking? Was it required by law?

I guess it is required to inform shareholders about this sort of things.
Maybe they postponed the announcement as long as they could, but eventually they had to make it public.
 
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gnasher729

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Speaking from a position of complete ignorance and lack of understanding here, why did this company make this dramatic announcement that ended up shocking investors and hurting their share value? That decision seems counter to their interests.

Is there a larger strategic advantage to such an announcement that I'm overlooking? Was it required by law?

The share value is hurt because Apple will stop buying chips from them. That can't be kept a secret. There sales numbers in 2019 will be down. I don't know about the UK laws; if it was a US company they would have to tell investors, but people would have found out anyway.

In the end, they are much better off as if Apple had never been a customer. Share price was low in 2007 and went up due to the Apple deal. Now its 2017 and the share price went down due to the end of the deal. In the meantime, the company made loads of money.
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There must be something going on at Apple for them to suddenly screw over or not pay their core suppliers for GPU (Imagination), radio baseband (Qualcomm), power management (Dialogic), etc.

There is one thing going on at Apple: They developed their own graphics chips, they have plenty of hardware engineers to do that, and they are not suddenly screwing over Imagination; they told them two years ago that they won't need Imagination's IP anymore, so they won't be paying anymore.

Apple isn't screwing over Qualcomm. Qualcomm have been screwing over Apple for a while, and Apple had enough of it. Qualcomm has also been screwing over Samsung for a while, and Samsung had enough of it as well.
 
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Kaibelf

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I guess it is required to inform shareholders about this sort of things.
Maybe they postponed the announcement as long as they could, but eventually they had to make it public.

They didn’t just inform shareholders. They also accused Apple of some kind of theft and demanded to know how they could possibly use another solution. It came across as desperate and juvenile, like a post-breakup post on Facebook by an angry middle school girl.
 
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mi7chy

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Speaking from a position of complete ignorance and lack of understanding here, why did this company make this dramatic announcement that ended up shocking investors and hurting their share value? That decision seems counter to their interests.

Is there a larger strategic advantage to such an announcement that I'm overlooking? Was it required by law?

Does seem like poor business etiquette to throw a long time supplier under the bus with the announcement. A buyout of a company is usually based on the share price so it seems rather obvious the announcement is part of a planned strategy to make it a cheap buyout but if Apple is not showing interest then who are they colluding with? Perhaps it's another instance of selling out the West to Chinese central government judging by what's going on at Cypress Semiconductor.

http://www.bizjournals.com/sanjose/news/2017/02/23/cypress-semiconductor-rodgers-canyon-bridge.html

Tim Crook has already demonstrated his allegiance using untaxed money hidden offshore to fund an Uber rival. This character and his cronies need to serve time at Gitmo.

http://fortune.com/2016/08/04/apple-invest-didi-chuxing-china-uber-merger/
 
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dilbert99

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Everyone does that if they can and it makes financial sense to after a certain amount of time has passed. I don't think Apple would build a whole new team in house that does what Imagination does as it is so much more expensive and risky to do.

Imagination wasn't developing the technology Apple needed to move forward. Why shouldn't they move on?

I'd tend to agree, if a company creates something and had a large customer base then the cost for each unit is small.
Any company that replicates something and doesn't sell on to a large customer base bears 100% of that development.

I guess if the company was mainly selling to Apple then there must be a significant cost Apple is paying and cheaper to go it alone or Apple wanting more control.
 
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Atlantico

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There must be something going on at Apple for them to suddenly screw over or not pay their core suppliers for GPU (Imagination), radio baseband (Qualcomm), power management (Dialogic), etc.

Yes, I agree and I find that to be the only interesting thing about this article. I don't really care either way whether or not Apple screwed over Imagination. What I do care about is what Apple is doing, if this means in-house graphics hardware from Apple, I'm intrigued.
 
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morcutt11

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As a business owner I can tell you that anytime a majority your revenue is driven by just one or two customers, you're going to eventually have a problem. It was on Imagination to grow their business beyond Apple and that didn't happen. As for Apple using companies products/IP and eventually dumping them, why wouldn't they? When Apple initially launched the iPhone, they had no intellectual capital or IP for a vast majority of the technologies used by the phone. As such they pay royalties everywhere as everyone wants a piece of the action. Over they years, Apple has developed its own technology and evolved it to the ever-changing needs of their product. As such it is natural that they would eventually move away from some suppliers, pulling some work in-house. Additionally, it isn't surprising to see new suppliers come on board as a result of the technology evolution and changing needs of the iPhone platform.
 
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danskin

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Feb 22, 2013
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Apple is the kind of company that only uses you long enough to learn how your technology works and then once they devise a way to get around your patents, shut you out and replicate the functionality of your solution. Alternatively they just buy you. Like they did with Siri, TouchID and so on.

welcome to capitalism ;)
 
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morcutt11

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Yes, I agree and I find that to be the only interesting thing about this article. I don't really care either way whether or not Apple screwed over Imagination. What I do care about is what Apple is doing, if this means in-house graphics hardware from Apple, I'm intrigued.
Not only in-house graphics hardware, but hardware specifically designed for the platform (e.g. Metal2). As features like AI, VR and the Metal 2 framework, the design of supporting components like the GPU clearly needs to evolve to meet the needs of this highly customized environment.
 
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840quadra

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Apple is the kind of company that only uses you long enough to learn how your technology works and then once they devise a way to get around your patents, shut you out and replicate the functionality of your solution. Alternatively they just buy you. Like they did with Siri, TouchID and so on.

A scroll through the legal notices on any iOS device, and you’ll get a good idea how much of it’s ecosystem is used under license. If they do what you say, I would expect them to have either purchased or had lawsuits from most of these entities by now, as many of them are in the legal notices on my iPhone 3G, iPhone 7, and 10.5 iPad Pro.
 
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morcutt11

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Apple is the kind of company that only uses you long enough to learn how your technology works and then once they devise a way to get around your patents, shut you out and replicate the functionality of your solution. Alternatively they just buy you. Like they did with Siri, TouchID and so on.
You make it sound like Apple sets out to steal other people's technology. There is no evidence of that being the case at all. When Apple started making the iPhone, it used a lot of technology that Apple had no experience with. It was obvious that they had to acquire that technology elsewhere and agree to the related contracts with those 3rd parties. As the product (iPhone) evolves, 1) Apple's needs change for the technology they are using (e.g. GPUs tailored to Metal) and 2) Apple gains more experience with the technology. As a result, Apple has a choice to continue to use 3rd parties to supply some technology or pull those services in-house. In the end, it comes down to $ as it would for any company. There are advantages to outsourcing some of the technology needs - companies like Imagination and Qualcomm should be staying on the leading edge of their markets, adapting to overall trends in those markets in a predictive fashion to meet future needs. Likewise, there are advantages to bring the technology in-house - such as being able to tailor technology to the iPhone platform needs more quickly, keeps things more secret in terms of future product releases, etc. As stated, cost plays a considerable role as well - how much does it cost to maintain staff and other resources to develop the technology vs. contracting with a 3rd party.

In the end, it is just business and it has nothin to do with trying to steal technology. Qualcomm and Imagination know that. That is the risk that you take anytime as you sell products or license IP. Qualcomm's contract specifically outlined that as Apple had to pay Qualcomm for their IP, even if Apple was using a competing product.
 
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citysnaps

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Oct 10, 2011
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There must be something going on at Apple for them to suddenly screw over or not pay their core suppliers for GPU (Imagination), radio baseband (Qualcomm), power management (Dialogic), etc.

No. It's not screwing over. And in each case there's a contract that governs what was negotiated and expected.

More accurately, it's called some of Apple's vendors are not able to keep up with Apple's demands and fast pace for differentiated tech that Apple needs to drive its future. Imagination couldn't deliver. Apple felt they could internally using their own differentiated secret sauce rather than Imagination's undifferentiated tech available to all. Happens all the time in the tech world.

In the case of Imagination, there was plenty of warning (at least 2-4 years, and likely more) that Apple's long-term needs and requirements were not being met by what Imagination had to offer. And that Apple chose to go it alone with their own tech to secure it's future. Smart move. It's about the future, not maintaining and being stuck in the past.
 
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bkkcanuck8

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Sep 2, 2015
408
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Does seem like poor business etiquette to throw a long time supplier under the bus with the announcement. A buyout of a company is usually based on the share price so it seems rather obvious the announcement is part of a planned strategy to make it a cheap buyout but if Apple is not showing interest then who are they colluding with? Perhaps it's another instance of selling out the West to Chinese central government judging by what's going on at Cypress Semiconductor.

http://www.bizjournals.com/sanjose/news/2017/02/23/cypress-semiconductor-rodgers-canyon-bridge.html

Tim Crook has already demonstrated his allegiance using untaxed money hidden offshore to fund an Uber rival. This character and his cronies need to serve time at Gitmo.

http://fortune.com/2016/08/04/apple-invest-didi-chuxing-china-uber-merger/

If the statement Apple made is correct and Imagine had two additional years of notice and kept that material information from shareholders (especially new ones) .... I see a world of hurt as shareholders start suing the company for misleading them.....

It is at least highly unethical to let shareholders believe they were buying shares on information that was no longer accurate over the long term, and I believe it would be illegal in the United States.
 
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