Apple will pay only 10 cents per iPhone to Imagination Technologies by 2019, UBS predicts

Apple will pay only 10 cents per iPhone to Imagination Technologies by 2019, UBS predicts
Earlier this month, we reported that Apple is set to terminate its relationship with GPU chip manufacturer, Imagination Technologies, by 2019. Cupertino confirmed that it is working on an “independent graphics design”, sending Imagination’s shares 70% down. The situation for the UK-based GPU designer is now taking shape in numbers, with recent estimates coming in from UBS, Reuters announced.

The Swedish banking conglomerate predicts that Imagination Technologies will be in the loss spectrum by fiscal 2019, as Apple is set to reduce royalty payments per iPhone by more than 60%. Apple currently pays Imagination around 30 cents of a dollar for every iPhone produced, but UBS predicts that this would drop to around $0.10 over the next two years. That's pretty much the amount Imagination gets from its low-profile partners, such as MediaTek. 

Up to two thirds of Imagination’s business comes from contracts with the Californian tech giant. The company is currently worth about $370m, which is absolutely incomparable to Apple’s multi-billion dollar value. UBS estimates that Imagination’s shares are worth about 110 pence apiece – business with Apple accounting for 75 pence of that. The actual stock value at present gravitates around 103.19 pence.

Apple’s decision to break ties with Imagination Technologies for the production of GPU units sent shivers down the huge supply chains that feeds off iPhone demand. Last week, we also heard some reports from Germany, stating that Apple is also working on an in-house power management unit, sending its current supplier’s shares up to 35% down.

Nonetheless, Reuters reports that Apple and Imagination are in talks for a new licensing deal. Should that fail, UBS' prediction does not spell a bright future for the GPU chips manufacturer.

source: Reuters via 9To5Mac

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28 Comments

1. Finalflash

Posts: 4062; Member since: Jul 23, 2013

Sad, got used and thrown out, even though they're doing an amazing job with their GPUs. Performance wise, Apple likely can't do much better than Imagination's offerings anyway at best, so it is likely just for the cheaper chips.

2. Nopers unregistered

What? They'd have complete control of the architecture, drivers and they wouldn't have to pay licensing fees. Sounds like a huge improvement to me although I'm not sure why they didn't just acquire imagination technologies.

3. marorun

Posts: 5029; Member since: Mar 30, 2015

Because they are cheapo thats all. All about increasing as much as possible margin per device as they dont sell as many as before. and i agree they wont be able to produce as good gpu. Its will work but wont be impressive.

4. kiko007

Posts: 7491; Member since: Feb 17, 2016

"and i agree they wont be able to produce as good gpu. Its will work but wont be impressive." Lmao... have you SEEN Apple's chip game lately? Give it two years... best GPUs on the market by then. I guarantee it. "All about increasing as much as possible margin per device as they dont sell as many as before." They just came off the greatest mobile quarter in their history. Something tells me you don't what the hell your talking about.

13. combatmedic870

Posts: 982; Member since: Sep 02, 2015

Have you thought about how they moved so many IPhones? It was the first time ever IPhones were buy one get one free. Ever. So yes they moved more phones. But I doubt they would have moved that much, if it weren't for there huge promotions and sales. I know a lot of people that got IPhones specifically because they were buy one get one free. You think you know a person... Me: you got an iPhone? I thought you hated IPhones...? Them: well.... Yeah.... But dude... Buy one get one man. Me: I thought you wanted the S7 edge that's about to come out? Them: well.... Yeah... Dude.... Buy one get one man. My girl wanted one... So might as well get one free. Me: I don't even know you any more. Get out of my car.... Them: but we are on the highway dude. Me: use your iPhone to break your fall. Tuck and roll.

16. kiko007

Posts: 7491; Member since: Feb 17, 2016

You need to check into the nearest psychiatric ward, immediately.

14. AlikMalix unregistered

They're hoping that if they repeat this bullcrap enough times it will become true. Apple designs the best SoC in house. They can design the best GPU in house. When they bought Siri - they improved that software where competitors still cannot do things Siri can - especially opening Siri up to 3rd party access. Their FP sensors are still unmatched and we're perfect from the first 5s version. They keep denying hat Apple can and does know what they're doing. Android devices and software are lacking in so many areas compared to iPhone and they are blind to see it.

18. tedkord

Posts: 17131; Member since: Jun 17, 2009

Your Siri point is invalid. Siri was dramatically less functional after Apple implemented it then it was before they bought it. Andaz assistance go on phones, it's kind of third place right now.

15. Finalflash

Posts: 4062; Member since: Jul 23, 2013

Lol no they won't, GPUs aren't even close to being like CPUs, just ask Intel (who is far FAR better than Apple at the chip game, yet somehow never got their GPUs off the ground enough to actually challenge Nvidia or AMD GPUs). Also, their CPUs are okay, they always seem to win in single core tests and aggregate tests but in every single 3DMark test they either lose or are on par with other chipsets of a similar generation in CPU. Even in the aggregate tests like Geekbench and Antutu, they used to lose pretty badly when the weighing of the scores was equal. Now they weigh it more for single core (not for a bad reason though) and Apple wins. But that is just how the aggregate tests are set up and has nothing to do with chipset performance overall (kind of like PA's battery test and how ridiculous it is compared to others). Even the javascript tests that CPUs are compared on don't actually compare equally because of the different browsers used (chrome vs safari). In Anandtech's review of the SD835 they said the following: http://www.anandtech.com/show/11201/qualcomm-snapdragon-835-performance-preview/2 "Yes, the iPhones perform well in these JavaScript tests. No, you cannot use these tests to compare IPC between Apple’s A-series SoCs and those found in Android phones, because they are running different browsers. A significant portion of the iPhones’ performance advantage actually comes from Safari’s JavaScript engine." There's a lot of marketing and pro-Apple fluff that goes around because everyone wants free stuff and invites to Apple events. But all in all, their CPUs are okay and on par with the competition, and GPUs are far and away a whole different game altogether. Even the current Imagination GPUs are largely only used in iPhones. They pretty much are already custom made for Apple. It won't get better all of a sudden just because Apple is making it.

17. kiko007

Posts: 7491; Member since: Feb 17, 2016

I'm not gonna waste time arguing with you. All I know is that if you think Apple's CPU are just "okay" you've got a lot to learn about mobile computing. Carry on.

21. Finalflash

Posts: 4062; Member since: Jul 23, 2013

Of course of course, evidence must be hard to come by when you know so much about mobile computing.

22. kiko007

Posts: 7491; Member since: Feb 17, 2016

You call what you posted evidence? That's a bit of a stretch there chap...

25. sgodsell

Posts: 6847; Member since: Mar 16, 2013

Kiko007 the current iPhone 7 GPU is slow in comparison to other mobile GPUs. Apple gets their speed because they use low resolution displays. 100% a fact. kyokojap(.)myweb(.)hinet(.)net(/)gpu_gflops

26. AlikMalix unregistered

Suddenly, there are offscreen tests.!!! (And your point went right out the window)

27. zenun12

Posts: 205; Member since: Oct 31, 2016

The currwnt iPhone7 GPU is just an improved iPhone 6S GPU.

28. RebelwithoutaClue unregistered

Side note: best Mobile GPU not best GPU overall. Major difference

10. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

I agreed until you said they won't be able to produce a good GPU. They do design a good CPU. Please remember, Apple is an ARM licensee just like Samsung. Apple's GPU is based on reference designs from ARM. ARM also makes a GPU. I am sure Apple can also use that as a reference to build their own. They also have engineers who can take a PowerVR chip and reverse engineer the tech and see how to make similar without infringing. One thing you can be sure of, IT will be watching Apple and I don't see how Apple will be able to make a GPU without either licensing tech from IT or ARM without infringing on either IP.

11. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Ignore the idiot. There are 4 quarters in a year. Having one or 2 good quarters still isn't all 4 of them. Apple and Samsung. always split the year in half. Once thing Samsung will sell 300M plus phones in 2017. In fact I expect 350M+. Apple has found a way to squeeze more power from the CPU they design. But its also not every efficient considering how fast it rips through a battery. Especially for a phone with no advanced features. The Galaxy S and Note run a heavier OS, have far more features and sure in benchmarks appear slower. But the fact is, if you took away all that weight, the S would be at least 30% faster than the iPhone in day to day tasks.

12. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

Apple can make a good GPU. But can they without stealing what they learned form IT or licensed from ARM? Well we will see! There first chip wont be the best available for the very first.

20. tedkord

Posts: 17131; Member since: Jun 17, 2009

There will definitely be licensing fees, for the patents involved. Now, weather those fees are more than what they were paying for the imagination gpus, I don't know. Also, they could just decide not to pay them, and make the patent holders sue to get their money.

9. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

They didn't get used and thrown out. Apple tried to buy the company, they chose not to accept the offer. Now I am sure they feel stupid for not doing so. But the only reason I am glad they didn't sell is, IT wants to provide their tech to other companies which if Apple bought it, would never allow. Even when Apple designs their own CPU, they still have to pay someone to fabricate it.

5. adi90

Posts: 554; Member since: Dec 21, 2015

This is why I think government jobs are better. At least i don't have to plan my old days according to Tim Cooks mood.

6. zunaidahmed

Posts: 1182; Member since: Dec 24, 2011

considering they sell over 100 mil iPhones each year, it's actually not bad getting 10mil yearly just from licensing to Apple.

7. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

I think Samsung should buy them and use the PowerVR in the Galaxy. Or at least the tech behind it. Samsung did use the PowerVR in the S4 I believe it was. Maybe they felt they could do better.

24. omnitech

Posts: 1131; Member since: Sep 28, 2016

I don't think it makes sense for Samsung to buy them. Nvidia and other high end graphics cards companies maybe. Or maybe Intel if they are still serious about taking it to ARM in mobile, they might not be though since the core i CPU's dominate so much they probably couldn't care less if ARM continues to dominate that space.

8. Khyron

Posts: 397; Member since: Sep 28, 2015

maybe samsung could acquire IMAGINATION TECHNOLOGIES

19. tedkord

Posts: 17131; Member since: Jun 17, 2009

Why would they? The Mali gpus have been more powerful than the it ones anyway.

23. omnitech

Posts: 1131; Member since: Sep 28, 2016

They got some PC graphics card gigs and Sega Dreamcast gig. And they landed the Apple gig before. It's going to be a painful transition from super rich to mere mortal profits but they should be fine. Other companies that make too much off of Apple should look at some contingency plans in case Apple drops them too.

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