Imagination Puts Itself on the Block

Release time:2017-06-23
source:EE Times

After losing its top customer, selling off its SoC design group and putting its MIPS processor core licensing business up for sale, Imagination Technologiesb Group has put the entire company on the block.

U.K.-based Imagination said Wednesday (June 22) that after receiving interest from multiple parties, its board of directors has initiated a formal sale process for the entire company and is engaged in preliminary discussions with potential bidders.

Imagination said it remains in a dispute with Apple Inc., a key GPU core licensee for years, which notified the company in April that it will no longer use Imagination’s intellectual property in new products. Imagination said in May that it was engaged in a "dispute resolution procedure" with Apple and that negotiations had stalled.

Apple dropped Imagination to instead focus on its own internal graphics technology. In April, Imagination expressed doubts that Apple could go it alone without violating Imagination’s patents. Analysts have said that Imagination may ultimately sue Apple, though sources told EE Times in April that the company wasn't planning any lawsuits.

Analysts reached by EE Times saw many potential possibilites for an acquisition of Imagination, though the value of the company is diminished with the loss of the Apple business. 

Jim McGregor, principal analyst at Tirias Research, said the possibility that Imagination would be sold has been around for a year, but that he sees few prospects for a blockbuster deal.

“I would expect the company to be sold either in pieces or at a discount, because I see little value in the MIPS and Ensigma group, especially since the MIPS IP portfolio was sold to a consortium including ARM when Imagination bought them and the MIPS architecture has not won many new sockets in the recent past,” McGregor said.

Imagination’s current value proposition really comes from the graphics group, McGregor said. Intel had been a major investor, but sold its stake in Imagination in 2015, McGregor noted.

Apple would be a logical acquirer of Imagination because Apple remains a stakeholder in the firm, but because Apple is developing its own graphics technology so it seems unlikely, according to McGregor. There are a few other possibilities such as Taiwanese SoC vendor MediaTek, but they also seem like longshots, he added.

“The most likely reason to buy Imagination is the IP portfolio,” McGregor said. “With this in mind, there are many companies that could potentially be interested in Imagination ranging from patent trolls to major IP vendors, semiconductor vendors, ODMs, contract manufacturers, and even OEMs.”

Rob Lineback, a senior research analyst at IC Insights Inc., said Imagination’s decision to put itself up for sale makes sense since it lost the Apple business and it’s primary competitor, ARM, appears to be getting strong financial backing from its parent company, SoftBank.

Lineback said Imagination's graphics processing technology and design cores could attract interest from a wide range of companies—including cellphone vendors that develop their own SoC application processors, like Samsung or more recently Xiaomi in China. Imagination might also be an attractive sales target for Google, Lineback said.

“A sale could have a significant impact on suppliers of application processors for phones and mobile devices,” Lineback said. “It could also cause more companies to move to ARM's graphics cores or in some cases develop their own GPUs and video cores for MPUs.” 

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It has been announced that Dr. Leo Li is to become the next CEO of Imagination.Currently Chairman of the Global Semiconductor Alliance Dr. Li is a well-known figure in the semiconductor industry and has over 30 years of industry experience. Recently he was chairman, CEO and president of Spreadtrum Communications and chairman of RDA before becoming Co-President at Tsinghua Unigroup.During his nine-year tenure at Spreadtrum, Dr. Li drove a focus on continuous innovation, quality control, and customer relationship management and helped grow revenue from $100 million to $2 billion and increased the company’s market value from $35 million to $7.5 billion.He brings extensive experience of working in both the US and in China, two of Imagination’s major markets, and his appointment is seen as supporting the company’s strategy of expanding into China and bridging the gap between US, Europe and Asia.Imagination is already developing its presence in China, one of the largest semiconductor markets in the world, through a number of new licence deals and design-ins.The company is focused on creating and licensing a broad range of silicon intellectual property.Dr. Li replaces Andrew Heath, who has led Imagination since February 2016 and was responsible for first returning the company to profitability and then brokering the sale of the company to US based private equity firm Canyon Bridge.Commenting on his appointment Dr. Li said: “We have a strong strategy today to evolve the company to the next level of success by capitalising on the opportunities in other markets, particularly China, one of the largest semiconductor markets in the world. We will have a renewed focus on technology innovation through strengthening our R&D capabilities, making Imagination a clear global technology leader again, and bringing value to our customers."
2018-04-04 00:00 reading:356
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