Imagination Tech begins dispute resolution with Apple, plans disposals

Multimedia, processor and communications technology company Imagination Technologies Group published a trading update for the year to 30 April on Thursday, as well as confirming it had commenced a dispute resolution procedure with Apple and announced that it intended to sell its MIPS and Ensigma businesses.

The London-listed group said it finished the financial year “strongly” with the results expected to be in line with the board's expectations, which it said reflected the positive effects of the restructuring implemented during the last 15 months as well as a focus on Imagination's new priorities.

As it announced on 3 April, the group was in discussions with Apple regarding its commercial relationship.

“Imagination has been unable to make satisfactory progress with Apple to date regarding alternative commercial arrangements for the current licence and royalty agreement.

“Imagination has therefore commenced the dispute resolution procedure under the licence agreement with a view to reaching an agreement through a more structured process,” its board explained.

“Imagination has reserved all its rights in respect of Apple's unauthorised use of Imagination's confidential information and Imagination's intellectual property rights. “

Also since 3 April, the board said it had reviewed the composition of the business.

“While the Group has continued to invest in its MIPS and Ensigma businesses, it has now decided to actively market these businesses for sale, concentrate its resources on PowerVR and strengthen Imagination's balance sheet.”

MIPS was focused on the embedded processor markets, the board explained, where it had a “strong position”, and completed a number of deals with major customers during the last financial year.

It continued to see design wins in networking, routers and DTV/STB and had made “good progress” in the mobile LTE modem and industrial Internet of Things markets.

“MIPS also has a growing position in automotive through its relationship with Mobileye and is collaborating with a number of OEMs and Tier 1 suppliers.”

Ensigma offered “leading, comprehensive” IP licensing for connectivity in mobile computing, unmanned systems and IoT, Imagination Tech explained, with low power capability.

Revenues more than doubled in the first half of the 2017 financial year, driven by strong licensing activity., with that momentum reportedly maintained.

“MIPS and Ensigma have complementary capabilities in low power, connected devices providing end to end customer solutions with a strong security solution,” the board said.

Meanwhile, Imagination's “market leading” PowerVR business continued to address attractive growth markets.

“The group has recently launched its new PowerVR offerings in both the high-end XT and mid-range XE families, representing significant competitive advances in the PowerVR architecture.

“With continued investment, the group considers PowerVR to be well placed in mobile, automotive, digital TV/set top boxes and the rapidly emerging AR/VR market and having the potential to exploit investments for artificial intelligence in the medium-term.”

Imagination said it would continue to make the “appropriate investments” in the PowerVR business.

The group said it expected to publish its year end results the week commencing 3 July.