Intel and Apple increase stakes in Imagination
Published: 29 June, 2009
Graphics chip specialist Imagination Technologies of the UK may be taking a pivotal position in the accelerating race to power the next generation of mobile internet devices. Just a week after Intel took a 14% stake in the smaller company, Apple increased its own holding by three times.
Its holding now stands at 9.5%. Apple subscribed to 2.2m of a new issue of Imagination shares plus about 11.5m open market shares, tripling its existing stake. It already licenses Imagination graphics cores and uses them in the iPhone.
Intel is also a licensee, and the race for Imagination shares epitomizes the shifting power play that is taking place in the market for next generation smartphones, tablets and MIDs. Apple is looking to become more self-sufficient in terms of key semiconductor IPR for its devices, as seen in its creation of an inhouse design unit, built around last year's acquisition of low power processor firm PA Semi.
Meanwhile, Intel aims to dominate the emerging MID category, and received a significant boost when it announced a joint development with Nokia earlier this month. It will also be trying to extend its supply deal with Apple to the mobile space, especially for future products, including Apple's rumored tablet/smartbook hybrid, said to be in the works for next year.
Graphics capabilities are vital to modern devices like the iPhone, hence the interest in Imagination (although as a pure investment, the company has also delivered good returns, of about 180% since Apple first took a stake). The UK vendor's PowerVR MBX graphics cores feature in the iPhone, iPhone 3G, and all iPod touch models; while the new generation, PowerVR SGX, which has far more power, made its Apple debut in the iPhone 3GS. The increased stake sends a clear signal to other graphics specialists that there is little chance of penetrating the Apple mobile fortress any time soon.
PowerVR could become even more central to the Apple roadmap, and acquisition could hardly be out of the question in future, given the PA Semi strategy. If Apple does create its own ARM-based core, using the PA technology, for new devices to launch in 2010 or later, PowerVR cores would be likely to sit alongside. Imagination has also signed a manufacturing license deal with Samsung, the main supplier of iPhone baseband and app processors, which may, speculates CNET analyst Tom Krazit, point to Apple still using Samsung as a manufacturing partner, even if it creates its own PA-based designs.