Imagination Technologies Surges on Apple Acquisition Report

  • U.K.'s IMG designs chips for iPhone, iPad graphics processors
  • Technology news site Ars Technica first reported the talks

A report by technology website Ars Technica that Apple Inc. may be in talks to acquire British graphics chipmaker Imagination Technologies Group Plc caused shares of the Kings Langley-based company to rise as much as 16 percent Tuesday morning in London trading. 

Imagination, which is already more than 8 percent owned by Apple, had a market value of 508.7 million pounds ($732.4 million) as of Monday’s close, before the spike in its shares.

"Apple wants to drive the innovation of the technology development rather than wait for others to catch up with their semiconductor ambitions," said Neil Campling, an analyst at Aviate Global in London.

For Apple, buying a maker of graphics processing units already used in its iPhones and iPads would bring even more chip expertise under the Cupertino, California-based company’s roof. Apple bought CPU maker PA Semi in 2008, leading to the central processing chips used in today’s iPhones and iPads. Making a bid for Imagination could similarly let Apple control graphics features and efficiency by designing its own architecture.

"It makes strategic sense for Apple to bring the GPU design in-house," Campling wrote in a note to clients Tuesday. "Controlling every aspect of its processors could let Apple further optimize the efficiency and power consumption of its devices."

"The custom cores Apple designed for the CPU gave the company an 18-month head start over Qualcomm in 64-bit computing and a three-year lead in custom 64-bit cores," Campling said.

A spokeswoman for Imagination said the company doesn’t comment on market speculation. Apple media representatives didn’t immediately responded to queries.

Imagination shares were up 15 percent to 212.25 pounds at 10:12 a.m. in London. Apple is Imagination’s fifth largest shareholder with an 8.4 percent stake, according to data compiled by Bloomberg.

Imagination on March 17 said it would accelerate a restructuring program and shut down or sell some units, bringing cost cuts in the next year to $39 million. 

Apple has been seeking to enliven sales of its iPhone and Monday introduced a smaller model to try to spur upgrades. Chief Executive Officer Tim Cook also addressed the company’s legal standoff with the FBI over a court order requiring the company to help the U.S. unlock the handset of a terrorist who killed 14 people in California last year.

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