Apple Reboots Licensing Agreement With Chip Designer

Source: Apple.com

Apple (NASDAQ:AAPL) has signed a new licensing agreement with UK-based chip designer Imagination Technologies in a deal that will ensure that the company’s technology will continue to be used in iOS devices for years to come. The contract extension was revealed in a recent press release on Imagination Technologies’ website.

“Imagination Technologies Group plc announces that Apple has extended its multi-year, multi-use license agreement, which gives Apple access to Imagination’s wide range of current and future PowerVR graphics and video IP cores,” stated the company. “Under the terms of the above licensing arrangement, Imagination will receive on-going license fees, and royalty revenues on shipment of SoCs (Systems on Chip) incorporating Imagination’s IP.”

The recently signed contract also ended speculation that the iPhone maker would develop its own graphics processors or turn to one of Imagination Technologies’ rivals. “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 (NASDAQ:ARMH) or an in-house play,” observed Jefferies analyst Lee Simpson via the Telegraph. “There has been nothing specific stated in the release as to where the IP will be used, but it’s fair to assume for now that this continues to be used across Apple’s portable iDevices,” he added.

Although ARM was obviously passed over in favor of continuing with Imagination Technologies, it is not clear if the new licensing agreement will negatively impact ARM, so much as it will allay concerns about the future of Imagination Technologies. Imagination Technologies’ graphics architecture is already widely used in Apple’s various mobile devices. As noted by Apple Insider, the PowerVR S-series chips have been incorporated into every iOS device since the iPhone 3GS. Apple is also a significant investor in the chip design firm with approximately a 10 percent stake.

According to Apple Insider, Apple’s 64-bit A7 processor relies on Imagination Technologies’ PowerVR Series 6 graphics core. Apple first revealed the 64-bit A7 processor when it released the iPhone 5S last fall. The chip has also been used for the iPad Air and the iPad mini with Retina display.

The Wisconsin Alumni Research Foundation (or, WARF) recently filed a patent-infringement lawsuit against Apple over the technology used in the A7 processor. According to the complaint, Apple is infringing on a patented method for improving the efficiency and performance of computer processors. It is not clear from the lawsuit if Imagination Technologies’ PowerVR graphics or video IP cores are related to the alleged patent infringement.

Earlier this month, Imagination Technologies announced a new graphics processing architecture that may give Apple’s next-generation devices a dramatic performance improvement. According to Imagination Technologies, the PowerVR Series6XT architecture will deliver 50 percent higher performance as well as improved power management.

Follow Nathanael on Twitter (@ArnoldEtan_WSCS)

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