Apple has extended its partnership with Imagination Technologies in a deal that will see the Hertfordshire-based company’s technology power graphics and video on future iPads and iPhones.
Apple will license Imagination’s graphics and video microchip designs under the multi-year deal, an arrangement that will reap on-going license fees and royalties for the microchip maker.
The release directly named Apple as the party in the deal, something the San Francisco-based company does not normally allow, and Morgan Stanley analyst Francois Meunier said the explicit naming showed “the strength of Imagination's relationship with Apple”.
Apple is thought to be the FTSE 250-listed company’s largest customer, accounting for over 50% of royalty revenues.
Broker Jefferies said in note: “This announcement serves to steady any concerns investors may have had regarding Apple’s possible design out of Imagination’s graphics in favour of either ARM or an in-house play.”
The deal sets Imagination apart from other UK microchip makers such as ARM Holdings and Wolfson Electronics, who have both disappointed with recent updates due to a slowdown in smartphone sales.
Imagination’s shares climbed 16.16% following the announcement.
