How much did Apple pay to settle with Imagination?

How much did Apple pay to settle with Imagination?

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By eeNews Europe

Apple’s application processors are for use inside its own smartphone products but Apple’s statement, made in April 2017, that it was weaning itself of Imagination IP, caused the collapse of the Imagination stock price and forced the graphics company’s eventual sale to a US equity company backed by Chinese state funds. However, circumstantial evidence now points to Apple having come to some sort of settlement with Imagination that frees it from the risk of being sued for patent infringement.

In April 2017 Apple said it would cease to pay to royalties to Imagination within a period of 15 months to two years and Imagination riposted in a statement that it believed “it would be extremely challenging to design a new GPU architecture from basics without infringing Imagination intellectual property rights and does not accept Apple’s assertions.”

Imagination did say at the time that it had held discussions with Apple over “potential alternative commercial arrangements for the current license and royalty agreement.” The second half of 2017 or early 2018, with Imagination preoccupied with ensuring its own survival, would have been a good time for Apple to negotiate terms.

Imagination would not comment directly but a spokesperson said: “Apple remains our largest customer, and we value that relationship. There have been no legal proceedings of any kind.” A source close to the company characterized Apple as a “customer of good standing.”

The phrase “good standing” suggests there is no dispute. It would seem that either Imagination has changed its position on Apple’s ability to design GPUs without using Imagination IP, or that Apple has settled. Indeed, depending on the terms, Imagination may still be able to benefit from any success Apple has with the processors inside its latest smartphones.

Next: Apple’s A11 Bionic

One year ago Apple deployed its 10nm A11 Bionic processor within its iPhone 8 and iPhone X smartphones claiming that the chip used an entirely new graphics processor sub-system made up of three “all-new” cores. For “all-new” observers read “not PowerVR” and not licensed from Imagination Technologies who had supplied GPU cores to Apple for at least a decade. A year later and Apple has launched the A12 Bionic processor in 7nm technology to power the iPhone XS, XS max, and XR.

It now appears that “potential alternative commercial arrangements” have been adopted. They could have taken the form of one-off, or multiple payments, that would cover a general license without a need for a royalty. This could meet Imagination’s need of having its intellectual property acknowledged and Apple’s desire to cease paying royalties.

If such a deal is in place it is likely that the terms and conditions would remain confidential. A license fee payment would also have helped maintain Apple as Imagination’s leading customer. It does beg the question: whither Apple’s relationship with that other processor IP licensor ARM. ARM is the provider of the architectural licenses for the CPU cores that Apple designs for itself and the tribulations that have beset Imagination could one day strike ARM.

As Imagination Technology Ltd. is now a private company it is under no requirement to disclose licensing deal information immediately although large sales items might be noticable in the company’s accounts when they are eventually published. Apple is public and does have more stringent rules of disclosure. But any sums paid out by Apple to Imagination may be so far down in the noise of the finances of a company with annual revenues of $230 billion as to not be discernible.

eeNews Europe has no evidence that any sums of money were paid, but if they were it would be interesting to know how much.

The iPhone 7 is still on sale on Apple websites. It includes the A10 processor, the last Apple processor that is acknowledged to contain PowerVR and Imagination intellectual property, but with the arrival of the low-cost iPhone XR in October 2018 the iPhone 7 will be probably be phased out quickly. It will be interesting to see if Apple is still Imagination’s leading customer and a customer of good standing in six months or a year’s time.

Related links and articles:

News articles:

Apple describes 7nm A12 Bionic chip

Apple piles trouble on Imagination

Apple hires group of UK GPU engineers

Apple dumping GPUs: Imagination in discussions

Imagination, MIPS to be sold to China-, California-connected VCs

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