Imagination Begins Formal Sale Process After Apple Begins Developing Its Own Mobile GPUs

Imagination announced that it has started the formal sale process for the whole group, which includes the divisions designing the PowerVR GPU, MIPS CPU, and Ensigma wireless communications intellectual property. The news comes after prior struggles in the mobile GPU market, a failure to capitalize on the MIPS processor architecture, and recent news that Apple would be designing its own GPU IP.

MIPS Strike-Out

Imagination bought the MIPS IP in the hopes of becoming a more integrated IP solutions provider, similar to ARM and other chip makers that design and build their own CPUs and GPUs. The company must have also anticipated that ARM’s rise in popularity in the mobile GPU market could one day create a threat for it by making the ARM processor architecture less compatible with PowerVR GPUs.

However, despite Android supporting MIPS from the early years, along with ARM and x86, Imagination failed to show chip makers that the switch from ARM to MIPS would benefit them.

It’s likely that the ARM CPU dominance was so significant that even if MIPS CPUs offered a 20%-30% performance per Watt or performance per die area, as Imagination often claimed, it wouldn’t necessarily be worth it for chip makers to start learning a whole new architecture and then make every other SoC component compatible with it. This is a lesson that even Intel, a much richer company than Imagination, also learned in the mobile market.

The Decline Of PowerVR

Although PowerVR GPUs have always showed leadership in performance and efficiency in the mobile market, Imagination didn’t seem to take seriously expanding its market well beyond Apple, which remained around half of its business for a long time.

For the time the partnership with Apple was going well, Imagination continued to remain a more premium solution for potential customers, which allowed lower-cost GPU options such as ARM’s Mali and bundled options such as Qualcomm’s Adreno, to increasingly eat into its market share.

Apple Going Into Mobile GPUs

Imagination relying so much on Apple for its revenue was always a big risk, especially considering that Apple tends to integrate its hardware. Although designing GPUs seems to be even harder than designing CPUs, it wasn’t completely unexpected that Apple could one day either purchase Imagination to expand on its GPU technology the way it wants, or it would start designing its own GPU IP.

As we’ve learned recently from Imagination, Apple will stop using PowerVR GPUs and will build its own. This has prompted Imagination to threaten Apple with lawsuits over the allegedly inevitable IP infringement, which probably only reinforced Apple’s decision to drop Imagination’s GPUs.

Apple had previously tried to acquire Imagination, but for some reason talks broke down.

Imagination Starts Sale Process

Imagination’s market cap dropped significantly since the news came out that it would stop using PowerVR GPUs, and there now seems to be other buyers who are interested in acquiring the whole Imagination Technologies Group. Imagination confirmed that the sale process for the Ensigma and MIPS businesses, which commenced on May 4, has been progressing well so far. However, it also mentioned that although offers have been received, there is no certainty of a sale as of right now.

Imagination also seems to be inviting other potential buyers to contact Rothschild, its financial adviser who is assisting with the sale, to make a bid for its business.The GPU company also noted that an “offer period” has commenced, too, but it seems to have kept the deadline for bids private.