As Apple Jilts Imagination, MIPS Goes on Block

Release time:2017-05-05

Imagination Technologies Group disclosed Thursday (May 4) that it has started a "dispute resolution procedure" with Apple, as their negotiations have stalled. With the potential loss of Apple -- which accounts for about half of the U.K.-based company’s revenue -- looming large, Imagination is fighting for its survival.

Not coincidentally, the company revealed plans to sell two businesses. Going on the block are MIPS, whose CPU business is focused on embedded processor market, and Ensigma, which offers IP licensing for connectivity in mobile computing.

These moves mark the end of Imagination’s ambitious dream to compete with its rival ARM as an IP licensing powerhouse with GPU, CPU and connectivity technologies.

Imagination today says it now hopes to “concentrate its resources on PowerVR and strengthen Imagination’s balance sheet.”

Despite Imagination’s stated plan to sell off MIPS and Ensigma to save its PowerVR business, many industry observers believe Imagination might eventually go up for sale.

Kevin Krewell, principal analyst at Tirias Research, told EE Times, “I expect that after the issues with Apple are resolved, Imagination itself will be sold. The results of the Apple resolution will determine Imagination's value at that time.”

Disputes with Apple

Imagination said last month that Apple had notified the firm it was developing its own graphics chips, Apple would no longer use Imagination's processing designs in 15 months to two years’ time.

Imagination’s discussions with Apple thus far apparently yielded very little progress. In a statement issued Thursday, the company said, “Imagination has been unable to make satisfactory progress with Apple to date regarding alternative commercial arrangements for the current licence and royalty agreement.” Imagination “has therefore commenced the dispute resolution procedure under the licence agreement with a view to reaching an agreement through a more structured process,” the company added.

Asked what such “a more structured process” entails, an Imagination spokeswoman declined to elaborate.

In April, Imagination expressed doubts that Apple could go it alone without violating Imagination’s patents. Although industry analysts foresaw possible legal action against Apple, sources tell EE Times that Imagination isn’t currently planning any lawsuits.

It’s widely understood that Imagination would face major challenges proving that Apple is infringing Imagination’s graphics engine IP. This is largely because Apple’s own new graphics chips -- which Apple claimed do not use Imagination’s processing designs -- won’t reach the market for more than a year. While Apple has every incentive to stall negotiations, it’s hard to imagine how Imagination could possibly make any breakthrough in discussions with Apple.

Who will buy MIPS?
Over the past month, Imagination’s board reviewed its business composition and decided dump MIPS and Ensigma. Industry debate now shifts inevitably to who might eventually acquire MIPS.

Krewell told us, “MIPS is still a classic CPU design with scalability and an established software ecosystem.” Krewell expects that a design house (such as Cadence, Mentor or Synopsys) will look at it.

He added, “It's also possible that a leading customer like Microchip would consider buying out its license. MIPS has also been used by a number of Chinese vendors and it could be bought by a Chinese entity.” In Krewell’s opinion, there's “still an opportunity for MIPS in the market, even though it's a diminished one.”

Imagination's First Half, FY2017 Results
PowerVR generated 67 percent of Imagination's revenue in 1H, FY17, which ended in Dec., 2016. (Source: Imagination)

PowerVR generated 67 percent of Imagination's revenue in 1H, FY17, which ended in Dec., 2016. (Source: Imagination)

However, Jim McGregor, principal analyst at Tirias Research, reminded that in the course of MIPS acquisition, the ownership of MIPS IP moved to a consortium which includes ARM.

Indeed, in November, 2012, ARM announced that it is a leading member of Bridge Crossing LLC, "a consortium of major technology companies affiliated with Allied Security Trust, which has entered into an agreement with MIPS to obtain rights to its patent portfolio." At that time, ARM noted that the MIPS patent portfolio includes 580 patents and patent applications covering microprocessor design, system-on-chip design and other related technology fields.  "The consortium will pay $350 million in cash to acquire rights to the portfolio, of which ARM will contribute $167.5 million."

McGregor said, "So, MIPS doesn't even own most of its IP. As a result, I don't see much value here, especially as many customers have moved to ARM."

MIPS, Ensigma businesses
Discussing the company’s half-year financial results (which ended in December 2016),  Imagination explained that MIPS profitability improved. Its royalties also grew 11 percent compared to that of a year ago, based on its volume growth. Licenses, however, remained flat.

The company said, “MIPS has been refocused on the embedded processor markets, where the group is strong.”

MIPS’ design wins have been mainly in networking, routers and DTV/STB, according to the company. “Good progress is also being made in mobile LTE modems, as the Group targets its differentiated technology to customers’ needs.” 

Imagination at that time also highlighted “Mobileye’s selection of MIPS I6500 for its latest EyeQ5 product [expected to reach the market in 2018], and Denso’s announcement to collaborate on joint research on hardware multi-threading for next-generation in-vehicle electronic systems.”

Meanwhile, Ensigma is now focused on IP licensing for connectivity covering “the complete end-to-end WiFi and Bluetooth solutions.” Imagination acknowledged that Ensigma has been loss-making, but saw “strong licensing revenues” -- up 2.1 million pounds -- in the first half of FY2017, “by covering R&D costs for the first time.”

Imagination's stock prices over the last 12 months (Source: Yahoo Finance)
Imagination's stock prices over the last 12 months (Source: Yahoo Finance)

Imagination's disclosure last month on the potential loss of Apple as its key customer immediately sent the company's shares down 70 percent and the stock has not recovered since.

Online messageinquiry

Apple — one of the world's most valuable public companies by market capitalization and a bellwether for the technology sector — slashed its revenue guidance on Wednesday, highlighting just how vulnerable large American companies are to the ongoing U.S.-Chinatrade war.Apple CEO Tim Cook told CNBC's Josh Lipton that the trade dispute between the world's two largest economies is exacerbating economic issues in China, which is an important source of revenue for the company.Other companies could face similar problems, according to experts."Weakening iPhone sales in China highlight the vulnerability of many U.S. multinationals to the U.S.-China trade war, both due the exposure of their manufacturing supply chains to China and because of the growing importance of China as a key consumer market for many U.S. products," said Rajiv Biswas, Asia Pacific chief economist at IHS Markit.Although data showed China's economy holding up for much of 2018, it now appears to be slowing as production metrics and export orders fall amid the country's dispute with the U.S., its largest trading partner.The fallout from a Chinese economic slowdown is likely to extend to other sectors like consumer spending — potentially hitting American companies that are doing business in Asia's largest economy."The U.S. is not the ultimate and unequivocal consumer with powers to dictate U.S.-China trade terms; given ... the undeniably large Chinese market with an aspirational and savvy middle class," said Vishnu Varathan, head of economics and strategy at Mizuho Bank."As such, U.S.-China trade disputes will be bumpy given the gap between U.S. President Donald Trump's perceived sense of leverage and a much more modest reality," Varathan told CNBC.Washington and Beijing agreed in early December to pause tariff escalations, but headlines about the ongoing negotiations have continued to send jitters through the market. Prior to that agreement, China and the U.S. had gone back and forth threatening to implement levies on billions of dollars worth of imports.While high profile, Apple's status in China is unlikely to be a bargaining chip in the trade negotiations, said Dan Wang, analyst at the Economist Intelligence Unit. "It's not a core technolo(gy) that both countries want," she said.However, if the trade dispute escalates, Apple products such as the iPhone may be subjected to higher tariffs imposed by both sides.The "iPhone's vulnerability to the US-China trade war serves as a red flag warning of the importance of concluding a U.S.-China trade deal in early 2019 to end the bilateral trade dispute and remove market fears about further escalation of the trade war," said IHS' Biswas.After all, in the case of smartphones, the Chinese burgeoning consumer class has a plethora of iPhone alternatives to choose from — especially if a trade war with the U.S. sparks anti-American sentiments that extend to products."An antagonistic U.S. may only tip the balance in favor of Chinese consumers adopting home-made devices rather than products like Apple," said Varathan.Louis Kuijs, head of Asia Economics at Oxford Economics, echoed that sentiment, telling CNBC that "this whole trade conflict between the U.S. and China is also affecting a little bit the choices that Chinese people make when they buy phones at the moment."
2019-01-07 00:00 reading:540
2019-01-04 00:00 reading:491
Apple lowered its Q1 guidance in a letter to investors from CEO Tim Cook Wednesday.Apple stock was halted in after-hours trading just prior to the announcement, and shares were down about 7 percent when trading resumed 20 minutes later.Apple lowered revenue guidance to $84 billion, down from the $89 to $93 billion it had previously projected. The company lowered gross margin to about 38 percent from between 38 percent and 38.5 percent.Apple blamed a variety of factors for the lowered guidance, including a weakening economy in China and lower-than-expected iPhone revenue. Apple said the lower-than-anticipated revenue happened "primarily in Greater China," but also said that upgrades to new iPhone models in other countries were "not as strong as we thought they would be."Cook's letter said fewer carrier subsidies, price increases based on the strength of the U.S. dollar and cheaper battery replacements caused the weak iPhone upgrades for the quarter."If you look at our results, our shortfall is over 100 percent from iPhone and it's primarily in greater China," Cook told CNBC's Josh Lipton in an interview Wednesday. "It's clear that the economy began to slow there for the second half and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy."A White House spokesman did not immediately have a response to Cook's comments on the trade tensions between the U.S. and China.There have been several reports pointing to weak iPhone sales in recent months. Some Apple suppliers cut their estimates last quarter, leading many to speculate consumers weren't upgrading to the new models. Apple also took the unusual step of promoting discounted prices for iPhones on its website if customers traded in an older model. The company also increased the trade-in value of some older iPhone models.Despite the lowered guidance, Cook did point out some growth areas in the letter to investors. He said Apple's device install base increased by 100 million units over the last year. Apple has been promoting its growing install base as a way to show it can squeeze more revenue out of each of its uses through subscription services like iCloud storage and Apple Music. The company is said to be considering new subscription products through its Apple News and TV apps as well."We had sort of a collection of items going on. Some that are macroeconomic and some that are Apple specific," Cook said in his CNBC interview. "And we're not going to sit around waiting for the macro to change. I hope that it does and I'm actually optimistic, but we are going to focus really deeply on the things we can control."
2019-01-03 00:00 reading:604
Amid forecasts of declining iPhone shipments, Apple is looking to India to reinvigorate sales, with plans to begin assembling its high end handsets at a Foxconn plant in Tamil Nadu in the south of the country.According to reports, Foxconn will start assembling some of the more recent iPhone X series devices at its plant in Sriperumbudur near Chennai, in southern India. Since Foxconn is currently producing the Xiaomi phones at this factory, the company is plannign a new $356 million iPhone production that will create about 25,000 jobs.Apple's plans to manufacture in India were rejected by the Indian government in 2017, due to Apple’s demands for duty exemption and a relaxation of the 30% mandatory local component sourcing requirement. However, it is believed that ministers requested new proposals and are expected to make an announcement when India’s commerce and industry minister, Suresh Prabhu, meets Apple executives at the World Economic Forum annual summit in Davos, Switerland later in January.Last week, Citi Research slashed its estimate for first-quarter production of iPhones by 5 million, bringing unit sales down to 45 million. Citi also nearly halved expectations on the most expensive iPhone XS Max. Analyst William Yang said the iPhone is entering a destocking phase, which does not bode well for the supply chain.Coupled with the trade war between the U.S. and China and the ban on some iPhones in China, Apple appears to view India as the next possible growth market. It already sells the iPhone 6S and 6E in India, made by Taiwanese manufacturer Wistron in Bengaluru. But since its higher end phones are mainly imported, the high handset cost makes it unattractive for a cost-conscious market. Hence the company appears to be lobbying to obtain tax concessions and incentives from the government so that it can assemble phones locally and reduce the end-user cost for the Indian domestic market.
2019-01-02 00:00 reading:553
  • Week of hot material
  • Material in short supply seckilling
model brand Quote
TL431ACLPR Texas Instruments
TPIC6C595DR Texas Instruments
CD74HC4051QPWRQ1 Texas Instruments
TXB0108PWR Texas Instruments
PCA9306DCUR Texas Instruments
TPS61021ADSGR Texas Instruments
model brand To snap up
TPS5430DDAR Texas Instruments
TPS61021ADSGR Texas Instruments
ULQ2003AQDRQ1 Texas Instruments
TPS61256YFFR Texas Instruments
TXS0104EPWR Texas Instruments
TPS63050YFFR Texas Instruments
Hot labels
Information leaderboard
  • Week of ranking
  • Month ranking
About us

Qr code of ameya360 official account

Identify TWO-DIMENSIONAL code, you can pay attention to

AMEYA360 mall ( was launched in 2011. Now there are more than 3,500 high-quality suppliers, including 6 million product model data, and more than 1 million component stocks for purchase. Products cover MCU+ memory + power chip +IGBT+MOS tube + op amp + RF Bluetooth + sensor + resistor capacitance inductor + connector and other fields. main business of platform covers spot sales of electronic components, BOM distribution and product supporting materials, providing one-stop purchasing and sales services for our customers.