Apple Opens Office Near Imagination’s Headquarters As Dispute Intensifies

Apple is setting up an office not far from the headquarters of Imagination Technologies as the two companies continue to wrangle over Apple’s decision to stop using the British firm’s graphics technology in its iPhones.

Imagination, a small company that currently makes about half its revenues from royalty fees paid by Apple, in April disclosed that the California company planned to stop payments as early as 2018. Imagination’s shares fell by about 60 percent on the news.

Staff poaching

The two companies have since been locked in a war of words over the issue, and in the meantime Apple has hired a number of Imagination staff, including former chief operating officer John Metcalfe, transferring them to its main UK base in London or to California.

Apple has now reportedly rented new 22,500 square-foot premises in the centre of St Albans, adjacent to the village of Kings Langley where Imagination is based, increasing fears it could essentially take over the smaller firm by hiring away its core staff.
Apple’s website now lists more than a dozen openings for positions related to graphics hardware based in the South Hertfordshire office. The new office was earlier reported by The Telegraph.

The company has insisted it will develop new graphics technologies that don’t use the smaller company’s patents, something Imagination contests is possible.

In a conference call with investors last week Imagination chief executive Andrew Heath said “we don’t accept Apple’s position” that it can build patent-free systems, adding that the claim it could do so was “unsubstantiated”.

Apple has used Imagination’s technologies since the iPhone’s launch in 2008.

‘Misleading’ statements

The company last week claimed it told Imagination two years ago it would begin winding down the relationship, saying in late 2015 it would stop buying new intellectual property and would only use older systems.

In 2016 the company said it told Imagination it would further reduce its use of the technology and so would pay a lower royalty rate. Finally, in February Apple said it told Imagination it would stop paying royalties altogether by 2018.

That timeline conflicts with Heath’s statement that Apple told Imagination only at the end of March “that they were certain” products to be released in 2018 or early 2019 would no longer use Imagination’s technology. Imagination informed investors on 3 April “when it had sufficient clarity on Apple’s position”.

Imagination has been criticised for the timing of its announcement, since it’s under an obligation to inform investors as soon as possible of any information that could affect share prices.

Apple said it was “disappointed” with Imagination’s statements, which it called “inaccurate and misleading”.

“We valued our past relationship and wanted to give them as much notice as possible to adapt their future plans,” Apple said in a statement. “We’re disappointed in their response, which has been inaccurate and misleading.”

The dispute indicates how much power Apple has over the suppliers who depend upon it for their revenues. Imagination isn’t considered a viable company without Apple’s business and has put itself up for sale since the April announcement.

Apple is also involved in a legal dispute with mobile chip giant Qualcomm, refusing to pay the company royalties and filing an antitrust lawsuit against it. Qualcomm has accused Apple of violating its patents and has asked for an import ban on some iPhones.

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