UK chip designer Imagination Technologies has seen its shares plunge 70% after news that its biggest customer – Apple – will no longer use the company’s tech for upcoming products.
Tanking to their lowest level since 2009, shares in the UK chip designer fell from 185p to 83p following the Apple news. Losing its biggest customer will hit the company hard, with Apple accounting for nearly half of Imagination’s annual revenues.
In the year ending April 30 2016, the company’s business with Apple represented revenues of £60.7m of the total £120m. In this fiscal year, Apple is expected to represent revenues of £65m.
It remains unclear how Imagination will make up ground following Apple’s departure, with the company once considered one the brightest prospects in UK technology.
The company supplied graphics chips to Apple, with the chips a key component in iPhone, iPad, iPod and watch products. The tech giant reportedly notified Imagination that it had started work on its own graphics design, in order to reduce its reliance on Imagination tech over the next 15 to 24 months.
However, Imagination has said that Apple has not given any evidence to support the claim that it will no longer use Imagination’s tech without violating patents, IP and confidential information.
“This evidence has been requested by Imagination but Apple has declined to provide it,” Imagination Technologies said in a statement to the press.
“Further, Imagination believes that it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights, accordingly Imagination does not accept Apple’s assertions.”
According to the Hertfordshire-based company, they are in discussions with Apple to agree alternative arrangements for licences and royalties.