Apple Hits Back at Supplier Imagination for 'Inaccurate and Misleading' Statements in Contract Dispute

[Iconoclysm]

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.

This is a vast oversimplification and twisted view of how this happened. Apple used this company's IP for 10 freaking years, think how long that is in this modern smartphone world. If you're a tech company and you're still making the same thing for 10 years without enough innovation that anyone can do the same thing in house with enough money, you should know this will happen. They were likely expecting they'd be bought.

As far as shutting them out and replicating.... Really? Replicating a GPU?
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Then, Samsung is made for Apple.

Samsung's IP is virtually nowhere in Apple devices. Their manufacturing certainly is, but they're mostly made to order parts with Apple's designs or someone else's. Samsung's great achievements are in manufacturing techniques, not the invention of the technologies they manufacture - which many Samsung fans think are Samsung inventions.

Anyway, if Apple bought Samsung, they'd be like a second arm for Foxconn.

 

[AdonisSMU]

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.

Well you don't make decisions like that simply because you "want more control". The finances have to justify it.

 

[MacBram]

Does seem like poor business etiquette to throw a long time supplier under the bus with the announcement.

? It's the supplier that made the announcement. Hence the comment you replied to, which wondered what compelled the supplier to make the announcement in the way they did.

 

[The Cappy]

This is a situation where both parties are probably in the right.

1) I think that Apple felt obligated to give Imagination fair notice that they were planning to pull the rug out from under their feet, so that Imagination wouldn't feel like the rug was being pulled out from under their feet.

2) Nevertheless, the rug was pulled out from under Imagination's feet. The notice itself resulted in financial collapse. From their standpoint, they think their IP is so strong that they'll discover Apple still owes them licensing fees for whatever tech it eventually unveils. Maybe they'll be right and maybe they'll be wrong. But the problem for them is that's all in the future. Right now, those products only exist in the form of a warning that they WILL exist. And really, I think that the recent statements made by Imagination were very truthful and correct from their standpoint. They really have been putting their ducks in order and improving their business, and it's no doubt frustrating to them that they can't even verify whether or not Apple will or won't infringe their IP.

3) But this last statement by Apple is problematic for me. I seems churlish. In trying to defend itself, Apple is showing a complete lack of balance. They're saying "we totally did the right thing and those guys are lying"... but really what's happening is that the Apple statement just wants to ignore the damaging impact its warning had. Apple needs to have acknowledged the unfortunate results of their initial warning but then added that said warning was the right thing to do, in order to prepare a company whose business they valued, adding that a last minute surprise would have been worse. Then they could say they regretted the unpredictable and unforgiving nature of the market.

 

[bkkcanuck8]

Well you don't make decisions like that simply because you "want more control". The finances have to justify it.

Dropping Imagination would not have been based on the finance -- it would have been based on strategic plans and Imagination technologies not being able to provide them the advances they needed going forward (probably related to the AR/VR research going on within Apple).... as such the relationship had run it's course and Apple for strategic reasons felt obliged to let Imagine go (30c is probably not high on the list of savings they could ring out). Long run it has to make financial sense, but finance would have had very little to do with this decision.

 

[NinjaHERO]

Sounds like after a long and fruitful partnership, Apple just found another way to get the tech it needed. Doesn't seem like anything unusual or diabolical here. Apple switches parts and chips all the time. Seems like Imagination just wanted to get the press on their side because their business is suffering.

 

[blackcrayon]

I don't know about anyone else, but I'm just excited to see what Apple has in store with their in-house GPUs. The PowerVR GPUs were great and served iOS devices well for many years. If Apple has something significantly better up their sleeve I can't wait to get the devices that use it.

 

[Kaibelf]

This is a situation where both parties are probably in the right.

1) I think that Apple felt obligated to give Imagination fair notice that they were planning to pull the rug out from under their feet, so that Imagination wouldn't feel like the rug was being pulled out from under their feet.

2) Nevertheless, the rug was pulled out from under Imagination's feet. The notice itself resulted in financial collapse. From their standpoint, they think their IP is so strong that they'll discover Apple still owes them licensing fees for whatever tech it eventually unveils. Maybe they'll be right and maybe they'll be wrong. But the problem for them is that's all in the future. Right now, those products only exist in the form of a warning that they WILL exist. And really, I think that the recent statements made by Imagination were very truthful and correct from their standpoint. They really have been putting their ducks in order and improving their business, and it's no doubt frustrating to them that they can't even verify whether or not Apple will or won't infringe their IP.

3) But this last statement by Apple is problematic for me. I seems churlish. In trying to defend itself, Apple is showing a complete lack of balance. They're saying "we totally did the right thing and those guys are lying"... but really what's happening is that the Apple statement just wants to ignore the damaging impact its warning had. Apple needs to have acknowledged the unfortunate results of their initial warning but then added that said warning was the right thing to do, in order to prepare a company whose business they valued, adding that a last minute surprise would have been worse. Then they could say they regretted the unpredictable and unforgiving nature of the market.

1. It'a not "pulling the rug out from under their feet" to simply change their supply chain (with PLENTY of notice). The entire concept of pulling a rug out from someone is that you surprise them without any warning. Are you "pulling the rug out from under the feet" of the servers at a restaurant if you find a different one you prefer and start going there instead? Do you somehow owe them lifetime business patronage?

2. I don't know what the value of my 401(k) will be in 5 years either. Should I be throwing a fit because I am not being informed? Imagination is crying about pure speculation with nothing to back it up, and the idea that Apple should clue them in to their internal trade secrets as they exit doing business with them is, at best, laughable.

3. So Imagination makes a series of accusations, then a series of threats, then complains to the press about how they are somehow victims because their gravy train is ending after being fattened up for a decade unnaturally and failing to diversify with that opportunity, and when Apple finally responds by saying that IT aren't being honest, somehow it's "churlish" and "lacking balance?" I'm not sure if you work for Imagination or some relative of yours does or something, but in the real world, people change vendors all the time, and in business, much like in life, no one owes you anything forever. Apple signed a deal, everyone made money, and then the deal ended, and they are moving on. I'm sorry that Imagination was too lazy and incompetent to get their house in order and idiotically assumed that their business would last forever, but that's frankly not Apple's problem, and last I checked Apple, and all corporations, are not there to serve as soup kitchens.

 

[ke-iron]

We will find out the real reason why Apple is dumping all their partners when the next iPhone is released. No doubt they will boast the new chip tech and how powerful it is built from the ground up.

I don’t blame Apple for what they are doing. People should know this by now. If you think you cannot be replaced and get to complacent and comfortable, Apple will take that tech, rebuild it from scratch with a new and improve architecture and shut you out.

 

[lunarworks]

"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."

That's amazing, it reads just like a techie trying to break up with his/her girlfriend/boyfriend.

 

[DotCom2]

As the saying goes..."It's not personal, it's just business."
Get over it and move on.

 

[KeanosMagicHat]

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.

Good post – this is precisely how Microsoft grew as well, work with a smaller company, take the technology and then drag them through the courts until they give up.

 

[nebo1ss]

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?

When you are a public traded company you are obliged to make these kind of announcements so that shareholders are aware of all the facts. There is no other option. If you fail to make these announcements you get in serious trouble with the financial regulator.

 

[TechGeek76]

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.

If Apple did, it should come out in the lawsuit.

 

[JPack]

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.

Given A10 taped out in 2015, this pretty much says A11 will have a lot of new Apple GPU tech.

I would expect all trailing edge products (cheap iPad, iPod, HomePod) to adopt A11 late next year.

 

[gnasher729]

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/

Everyone funding an Uber rival is in my good books. Cheating on customers, cheating on drivers, breaking the law as much as they can, latest thing stealing the medical records of a woman who was raped in an Uber car...

And you are spelling Cook wrong. Crooks are running Uber. Cook is running Apple.

 

[bkkcanuck8]

If Apple did, it should come out in the lawsuit.

You mean if Imagination did.... it would come out in a lawsuit against Imagination.... Apple in this case would only be the bearer of bad news that the company people invested in during that time did not fully disclose important material events in a timely manner.

 

[TechGeek76]

You mean if Imagination did.... it would come out in a lawsuit against Imagination.... Apple in this case would only be the bearer of bad news that the company people invested in during that time did not fully disclose important material events in a timely manner.

If APPLE informed them of this 2 years ago, it will come out. Clear now?

 

[macs4nw]

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.

Or perhaps some of those companies are taking advantage of Apple's deep pockets. At this point we don't know.

 

[cerote]

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.

The point of the article is it wasn't sudden. Apple is pointing out to them saying exactly what you are saying by them telling them two years ago they would be winding down on using them to eventually stopping.

 

[TechGeek76]

The point of the article is it wasn't sudden. Apple is pointing out to them saying exactly what you are saying by them telling them two years ago they would be winding down on using them to eventually stopping.

This article is just what is being told by both parties, nothing more. None of us know who is actually telling the truth.

 

[MikhailT]

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.

Exactly this. There are very strict regulations about this and if Apple isn't misleading in what it just said, ImgTech is going to be in huge troubles because they didn't inform their shareholders two years ago.

 

[bkkcanuck8]

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/

It is not untaxed money hidden offshore (nor is it hidden).... It is money earned and taxed in the local jurisdiction - which has never been repatriated to the US because of the high tax rates and no real reason to bring it back to the US. It is best to keep it in the other corporations offshore until there is a need for it.... in this case an investment in Didi. The US could easily solve the problem by reducing or eliminating "business income" tax and implementing a VAT tax (moving from the collection of the tax buried in the cost of goods, to at the time of sale of those goods -- still in the end comes out of the same pockets). It would mean that it would make more sense to manufacture and do business in the United States than before - as you now are taxing the importation of the goods from overseas and the goods manufactured locally equally. It also treats local mom & pop shops equally as those with clout in Washington as there would no longer be special loopholes for multinationals.
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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.

Imagination has been spending time and money trying to diversify and making huge strategic mistakes (IMHO re: MIPS) and instead of moving the ball forward and making technology that Apple would be stupid not to continue to license.... Continuing to rely on suppliers when you can now do better doing it yourself is stupid. When they first entered into contract together - Apple relied on all of the silicon design and manufacturing from 3rd parties. They now have many acquisitions under their belt and proven ability to design and implement highly advanced silicon themselves. Imagination has (IMHO) been mismanaged and this was the result.

Qualcomm acted first by withholding a billion dollars owed to Apple because Apple dared to co-operate with regulators (not competitors; the law) about potential disputes. It is only free to do so these days since they now have a second supplier which makes Qualcomm's blackmail threats moot to the most part.

Not familiar with Dialog.

 

[CarlJ]

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?

You seem to think that Apple announced something bad about Imagination (they did not). Or perhaps its easier for you to fit this into your ongoing narrative of "Apple is bad" by purposefully misunderstanding ("Tim Crook"? "Gitmo"? really?). Apple didn't announce this, Imagination announced in some sort of (probably legally required) financial guidance statement that they were losing their primary customer. They then proceeded to whine at Apple, quite publicly, and make all sorts of accusations and threats. Apple is responding to give their side of the story. Do you think it's unfair somehow for Apple to respond?

 

[Kabeyun]

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.

Please explain to the rest of us how this story represents Apple screwing over anyone. Unless of course you believe that component suppliers have an inherent right to be a permanent supplier. Have you read the details of these disputes (and by that I mean both sides, not just the non-Apple claims) or are you just grafting your bias onto them? Reading your posts, you don't even seem to be familiar about the recent facts (such as who announced what) let alone all the history. I wonder if you're interested.