Apple to 'stop using Imagination chips in new devices'

Imagination has vowed not to go down without a fight and says Apple will not be able to sever all ties without infringing on its intellectual property rights. While no acquisition was announced, Apple holds an 8 percent share in Imagination Technologies. So it looks like Apple is either developing their own graphics chip or its could have even found an alternative supplier.

The company said it asked Apple for evidence it can make processors without violating patents, but that Apple still hasn't provided any.

If so, it wouldn't be the first patent and IP spat for Apple, which has an ongoing and long-running dispute with rival Samsung Electronics over the design of its smartphone and tablet computers. Apple now uses Imagination's GPU chips in its mobile devices, but that's changing within two years when they move to in house designs-and that could lead to a patent fight. Apple has owned about 10% of Imagination since 2009. There were rumors that Apple was in ' advanced talks' to acquire Imagination Technologies but based on a recent press release from Imagination Technologies that no longer appears to be a possibility.

Apple has informed the British company that it will cease using its technology for new products in 15 months to two years, a statement said yesterday.

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While most of us were asleep Monday morning, United Kingdom -based Imagination Technologies Group said the Apple Inc.

The chip-maker has supplied Apple with technology and intellectual property for years. Apple, which owns 8.2% of Imagination, held talks over buying the firm previous year, but a deal foundered. Apple now holds more than 8 percent of the company; the Financial Times reported a year ago that Apple had held acquisition talks with Imagination but decided against a full takeover.

The British company's revenue for last fiscal year was £120 million. The company will no longer produce graphics chips for Apple.

Shares in United Kingdom technology firm Imagination Technologies have fallen by nearly 70% after Apple, its largest customer, said it would cease using its products.

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