Shares in Imagination Technologies fell by nearly 70 percent Monday after Apple announced it was severing ties with the graphic design company.
Imagination is Apple’s biggest customer, and has had a contractual agreement with the iPhone maker since the firm first launched the iPod in the early 2000s. Company officials stated Apple notified it they would be terminating their partnership within 15 months to two years time, Reuters reports. The news sent shares in Imagination down by as much as 72 percent Monday, causing the firm to be worth nearly $600 million less than it was Friday afternoon.
Apple is reportedly in the process of developing its own graphics chips, which, if perfected, would make Imagination’s services superfluous to the company.
Unhappy with Apple’s decision, Imagination expects to fight the move in court, raising questions as to whether Apple could develop its own operation without violating one of Imagination’s patents.
“Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination’s technology, without violating Imagination’s patents, intellectual property and confidential information,” Imagination said in a statement.
The company’s chief executive also raised doubts about Apple’s ability to carry on the production of its devices without Imagination’s proprietary technology. “
“It would be extremely challenging for Apple to design a brand new GPU (graphics processor unit) architecture from basics, that is, without infringing our IP rights and also infringing our confidential information,” Imagination Chief Executive Andrew Heath told reporters.
Monday’s incredible blow to its stock value comes after March raised expectations for the company, after it revealed new technologies that could be used in smart cars, virtual realty devices and smartphones.
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