After the recent layoffs at Imagination and some rumors that Apple may be considering purchasing the GPU company, Apple confirmed that the two companies have been talking about a potential acquisition, but no offer has been made so far.
“From time to time, Apple talks with companies about potential acquisitions. We had some discussions with Imagination, but we do not plan to make an offer for the company at this time,” said Apple in an official statement.
Although Imagination didn’t lay off anyone from its PowerVR, Ensigma and MIPS business divisions, the company has shown some signs that it’s struggling to gain new revenue or even maintain its market share in the core GPU market. Both ARM and Qualcomm have been chipping away at its GPU market share over the past few years. At the same time, Imagination has failed to reduce its dependence on Apple, its biggest customer by far in terms of revenue generated.
Imagination’s mobile GPUs are still some of the best, if not the best on the market, which is why Apple has kept using them for so long. The company even created the Metal low-level graphics API to be optimized for Imagination’s GPU hardware. There is significant synergy between the two companies at this point, which is why the acquisition would make sense for both companies.
Apple already controls how its CPU is designed, but the other major part of its SoCs is the GPU, which is still designed by Imagination. If Apple acquired Imagination, it would be free to not only design the GPUs exactly as it wanted for further integration with its CPU and other chips, but also to expand them to its Macbook line.
Imagination currently has a market cap of roughly half a billion British pounds (or about $750 million USD), which wouldn’t be all that expensive Apple and its deep pockets. However, Apple may feel that it could get the IP company for less in a couple of years if Imagination’s revenues shrink.
Perhaps ironically, because of the significant synergy between the two companies, Apple is also not in a big hurry to buy Imagination. However, as we’ve seen with AMD, if things go downhill too quickly, the top talent may also leave Imagination for Qualcomm, Intel or Nvidia. That’s talent Apple could risk losing if it waits too long, assuming the situation doesn't improve for Imagination over the next few years (something that could still happen, given a few strategic choices).