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Apple ups stake in iPhone graphics chip designer

post #1 of 32
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Apple has increased its holdings in Imagination Technologies, the chip designer responsible for the graphics technology inside the iPhone and iPod touch, and now holds a combined 9.5% stake in the company.

The British firm said Friday that Apple subscribed to 2.2 million new shares at £1.4275 per share -- the mid market close price on 25 June 2009 -- shortly after purchasing another 11.52 million shares on the open market. Combined, the investment of nearly US$5.2 million, brings the iPhone maker's total ownership interest in the company to 9.5%, up from 3.6%.

Apple is a "multi-year, multi-IP, multi-use" licensee of Imagination's current and future portfolio of PowerVR mobile graphics components, including the next generation PowerVR SGX VXD video IP cores.

That agreement is part of a broader, triangular deal orchestrated by the Cupertino-based electronics maker, shortly after acquiring fabless chipmaker PA Semi, that will allow it to internally develop its own next-generation mobile SoCs for future multi-touch handhelds that incorporate Imagination's latest graphics technology and then use Samsung to manufacture the chips.

Earlier this month, AppleInsider was first to report that the new iPhone 3GS achieves its OpenGL ES 2.0 support through the use of the PowerVR SGX graphics processor core, confirming predictions it made as early as April 2008 when news first broke of the secret deal struck between Imagination, Samsung, and Apple.

Apple's move to increase its holdings in Imagination comes just days after Intel over a period of two weeks upped its own stake in the chip designer to just over 16% by gobbling up tens of millions of new shares of its own. Like Apple, Intel is also a licensee of Imaginations technology, which it plans to incorporate into its Atom processor for netbooks and other mobile internet devices (MIDS).

The continued investment in Imagination by both tech heavyweights underscores the chip designer's position as a leader in mobile graphics technology, for which there is no equal. Although both companies have gradually increased their holdings in the UK-based firm, neither has shown signs of entertaining a serious takeover bid for the company, despite recent activity in Imagination's share price that would suggest otherwise.
post #2 of 32
Quote:
Originally Posted by AppleInsider View Post

That agreement is part of a broader, triangular deal orchestrated by the Cupertino-based electronics maker, shortly after acquiring fabless chipmaker PA Semi, that will allow it to internally develop its own next-generation mobile SoCs for future multi-touch handhelds that incorporate Imagination's latest graphics technology and then use Samsung to manufacture the chips.

Is this opinion or do you have a source for this statement?
post #3 of 32
Quote:
Originally Posted by merdhead View Post

Is this opinion or do you have a source for this statement?

Please see the earlier reports linked into the article. They tell the whole story. We are 99.9% certain. All of our earlier predictions have panned out and we expected, in due time, this will as well.

K
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post #4 of 32
One analyst notes that this increasing ownership by Apple and Intel can cause some concern amongst competitors who also license Imagination Technologies' hardware:

"Too high a stake by Apple or Intel could well cause some existing or potential licensees to think twice about having Imagination's technologies at the core of their roadmaps. We understand that management has already received concerned phone calls from existing licensees."

http://www.guardian.co.uk/business/m.../2009/jun/26/1
post #5 of 32
Quote:
Originally Posted by Kasper View Post

Please see the earlier reports linked into the article. They tell the whole story. We are 99.9% certain. All of our earlier predictions have panned out and we expected, in due time, this will as well.

K

This seems such a small investment, for a company the size of Apple & Intel. If they wanted to invest, why not take a larger stake, say 25% and get a seat on the board.

Any explanations?

Edit: I mean Steve Jobs will spend 3 times as much redeveloping Jackling House
post #6 of 32
Quote:
Originally Posted by petermac View Post

This seems such a small investment, for a company the size of Apple & Intel. If they wanted to invest, why not take a larger stake, say 25% and get a seat on the board.

Any explanations?

They may be content as high-level investors and not want to own the company outright, which could also lead to some antitrust matters. But that's just speculation.
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post #7 of 32
Quote:
Originally Posted by Kasper View Post

Please see the earlier reports linked into the article. They tell the whole story. We are 99.9% certain. All of our earlier predictions have panned out and we expected, in due time, this will as well.

K

It was more of a question of making it clear in the text. I'd be interested if someone from Apple actually intimated as much.
post #8 of 32
Quote:
Originally Posted by Kasper View Post

They may be content as high-level investors and not want to own the company outright, which could also lead to some antitrust matters. But that's just speculation.

In years gone by, Apple has taken, and then sold, larger stakes in ARM, Adobe? Positions where they didn't own the company, but believed enough to take sizable positions. Does it get awkward with Intels stake in the company.

Anyways, I always believed Apple should buy Sony or at least 50% of it, and then license all their technologies and marketing to Sony.
post #9 of 32
Quote:
Originally Posted by petermac View Post

In years gone by, Apple has taken, and then sold, larger stakes in ARM, Adobe? Positions where they didn't own the company, but believed enough to take sizable positions. Does it get awkward with Intels stake in the company.

Anyways, I always believed Apple should buy Sony or at least 50% of it, and then license all their technologies and marketing to Sony.

I know you don't mean his but would it be great if Apple had 50% of Sony and realesed osx in. Limited fashion.
post #10 of 32
Quote:
Originally Posted by merdhead View Post

It was more of a question of making it clear in the text. I'd be interested if someone from Apple actually intimated as much.

I can't speak for Apple Insider, but it's a fact that Apple uses the chips and a fact that they bought the exclusive design licence and a fact that they bought PA Semi.

I think Kasper's 0.1% is just because it's not certain they will use the licence until they announce the new chip, and it's not 100% that they will use Samsung to manufacture it. But it's not likely they would do all that, and spend all that money if they weren't ever going to use the licence and make some of their own chips.
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post #11 of 32
Quote:
Originally Posted by petermac View Post

This seems such a small investment, for a company the size of Apple & Intel. If they wanted to invest, why not take a larger stake, say 25% and get a seat on the board.

Any explanations?

Edit: I mean Steve Jobs will spend 3 times as much redeveloping Jackling House

IMG's strength lies in the diversity of its customers. IMG designs the IP, people pay a licence plus royalities on a per-chip basis. The money in funds further R&D, effectively all of IMG's licencees pay for the R&D for everyone, one way or another.

The company only works if there is a broad portfolio of licencees.

If one company buys them out, they they get the current and next gen tech, but then they totally have to fund the R&D and 500+ staff that work at IMG for ever more.
post #12 of 32
Quote:

So is there something, like competition, going on between Apple and Intel?
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post #13 of 32
Quote:
Originally Posted by petermac View Post

In years gone by, Apple has taken, and then sold, larger stakes in ARM, Adobe? Positions where they didn't own the company, but believed enough to take sizable positions. Does it get awkward with Intels stake in the company.

Anyways, I always believed Apple should buy Sony or at least 50% of it, and then license all their technologies and marketing to Sony.

I think Apple can more or less be relied upon not to get too predatory here. If it was Microsoft, they would probably try to own the whole deal, Apple plays better with friends and neighbours than that (usually).

IMO the chief danger is intel. Apple needs access to the technology so if intel did something mean like trying to buy up too much of the company, it might spark a "war" of sorts where Apple would be forced to respond by buying up more.

My understanding is that the company is widely held and the technology used by many different parties which is the healthiest situation from a business and social point of view. Monopolies are *always* bad. Where they are necessary or unavoidable, nationalisation is the only intelligent response.
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post #14 of 32
Quote:
Originally Posted by Kasper View Post

Please see the earlier reports linked into the article. They tell the whole story. We are 99.9% certain. All of our earlier predictions have panned out and we expected, in due time, this will as well.

K

So DOES this means that we will have better Graphic GPU chips coming for faster 3d speed and gaming ?? I guess for the MBP and the rest .
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post #15 of 32
Quote:
Originally Posted by Quadra 610 View Post

One analyst notes that this increasing ownership by Apple and Intel can cause some concern amongst competitors who also license Imagination Technologies' hardware:

"Too high a stake by Apple or Intel could well cause some existing or potential licensees to think twice about having Imagination's technologies at the core of their roadmaps. We understand that management has already received concerned phone calls from existing licensees."

http://www.guardian.co.uk/business/m.../2009/jun/26/1

These fears mean nothing if the only place to shop is imagination . Also intel and apple as major stake holders would want to sell as much product as possible. They would not restrict the market .

I feel that apple and intel are blocking msft out with their share buying spree of imagination stock.
Amd may next invest .


9
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post #16 of 32
Microsoft appears to be aligning with Nvidia and Tegra so I doubt we see them move towards Imagination.

It's really Intel that would offer any roadblock. They don't have a capable GPU architecture for smartphones/MID product as GMA and Larrabee graphics don't play
at that low of a wattage range so Intel has to make sure they are "in the loop"
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post #17 of 32
Quote:
Originally Posted by petermac View Post

In

Anyways, I always believed Apple should buy Sony or at least 50% of it, and then license all their technologies and marketing to Sony.

Apple should buy %100 of Sony YES
and after selling off the content divisions and the computer division's. Intergrate the two companies
into one seamless machine of great products .
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post #18 of 32
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Originally Posted by mark2005 View Post

So is there something, like competition, going on between Apple and Intel?

seems like something had been boiling up lately , Intel is moving into HPU chips now. But intel and apple both need each other. So maybe its high level cat and mouse .
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post #19 of 32
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Originally Posted by hmurchison View Post

Microsoft appears to be aligning with Nvidia and Tegra so I doubt we see them move towards Imagination.

It's really Intel that would offer any roadblock. They don't have a capable GPU architecture for smartphones/MID product as GMA and Larrabee graphics don't play
at that low of a wattage range so Intel has to make sure they are "in the loop"

What does Microsoft have to do with chips ??
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post #20 of 32
Quote:
Originally Posted by brucep View Post

What does Microsoft have to do with chips ??

They buy them though evidently not from Imagination. It was in response to

Quote:
Originally Posted by Brucep

I feel that apple and intel are blocking msft out with their share buying spree of imagination stock.
Amd may next invest .

I don't think Microsoft is attempting to forge a relationship with Imagination.
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post #21 of 32
Quote:
Originally Posted by petermac View Post

Edit: I mean Steve Jobs will spend 3 times as much redeveloping Jackling House

What?! "2.2 million of those shares reportedly cost the iPhone maker £1.43 ($2.36) a pop, while the rest changed hands at an undisclosed price. If all new shares cost the same, then Apple must have spent a total of $32.3 million on the deal"

SJ is spending $90m on redeveloping a house?
post #22 of 32
Apple must have a hard time in thinking up uses for its monstrous cash pile!

This seems like a good way of ensuring the security of their license, even of partially amortizing the cost, since they will receive the benefit, as a shareholder, of the money they will put in IMG's way as a customer.

Apple has previously made very large purchases of stock in key suppliers - Samsung, if I recall, was one of them, to the tune of several hundred million dollars. This is small by comparison, but may be more political than commercial in nature, in ensuring that they have some say in the development of the tech - or rather, a vote against it moving in another direction.

My last point is to remember Raycer: that purchase touched-off a frenzy of speculation, none of which appeared to have come good.
post #23 of 32
Quote:
Originally Posted by hmurchison View Post

They buy them though evidently not from Imagination. It was in response to



I don't think Microsoft is attempting to forge a relationship with Imagination.

Where or what MSFT would they put those chips in ??
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post #24 of 32
Quote:
Originally Posted by Quadra 610 View Post

One analyst notes that this increasing ownership by Apple and Intel can cause some concern amongst competitors who also license Imagination Technologies' hardware:

"Too high a stake by Apple or Intel could well cause some existing or potential licensees to think twice about having Imagination's technologies at the core of their roadmaps. We understand that management has already received concerned phone calls from existing licensees."

http://www.guardian.co.uk/business/m.../2009/jun/26/1

That may be exactly what Apple and Intel want to happen with minimal investment. When the stock goes down then the company is a cheaper acquisition and the competition won't be using the powerful graphices chips. Well, at least Apple would want that maybe.
post #25 of 32
Quote:
Originally Posted by ArthurAscii View Post

Apple must have a hard time in thinking up uses for its monstrous cash pile!

This seems like a good way of ensuring the security of their license, even of partially amortizing the cost, since they will receive the benefit, as a shareholder, of the money they will put in IMG's way as a customer.

Apple has previously made very large purchases of stock in key suppliers - Samsung, if I recall, was one of them, to the tune of several hundred million dollars. This is small by comparison, but may be more political than commercial in nature, in ensuring that they have some say in the development of the tech - or rather, a vote against it moving in another direction.

My last point is to remember Raycer: that purchase touched-off a frenzy of speculation, none of which appeared to have come good.

Great post
new and fresh points . What did happen Raycer?
p
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post #26 of 32
Quote:
Originally Posted by Virgil-TB2 View Post

Monopolies are *always* bad. Where they are necessary or unavoidable, nationalisation is the only intelligent response.

Wrong. Monopolies are bad because the can command higher prices from customers (Microsoft back in the day).

However, nationalization is inherently an evil response. You may think that it is better that the government own the company instead of its stockholders.
But a nationalized company will be a snare for the leaders of the government. Most politicians are already corrupt, but now being in charge of companies conducting business, their level of corruption will increase drastically. And the free market, ie. the people, will suffer more greatly.

Business and politics does not mix well, just look at third world countries. Unfortunately, this wisdom is lost in today's media and we may just look at ourself (the US government) in a few years to see another example of increased corruption when politicians get their hands on businesses.

(also, take a look at Fannie Mae, Freddie Mac to see that politicians should not get involved in business, lots of corruption in form of nepotism to see, and don't get me started on the Federal Reserve).
post #27 of 32
Quote:
Originally Posted by hmurchison View Post

Microsoft appears to be aligning with Nvidia and Tegra so I doubt we see them move towards Imagination."

Of course they won't. MS has no imagination and simply buying a company with that in their name would not help.
post #28 of 32
Quote:
Originally Posted by nudua View Post

Wrong. Monopolies are bad because the can command higher prices from customers (Microsoft back in the day).

That would be an illegal monopoly, and yes those are bad, but to simply force a successful company to break apart because it has obtained a legal monopoly by being better than other competition is not fair.
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post #29 of 32
Apple's dealings with suppliers is basically two-fold, from what I recall.
1. Use multiple suppliers for commodity parts, buying large stocks of parts to lock in prices and command production from those suppliers. It's an indirect way of manipulating other companies without buying them out and becoming a monopoly. Besides, gunning for a monopoly is really risky and expensive.
2. Use only one or two of the absolute best suppliers for strategic cutting edge suppliers, like for their iPhone/iPod Touch graphics chipsets.

As a corollary to both of the above, especially the second, is buy stock in the company to protect it from buyout from competitors, permit Apple influence/insight for future design roadmap, and protect exclusivity or partial exclusivity agreements.

While Apple may be buying to protect from outside buyers, I would imagine they are also protecting themselves for the future from Intel by knowing the future Intel will take being one of the few weaknesses of Intel...weaker graphics technology (unlike AMD). That way, in case Apple becomes even more proprietary in their designs, or less so, they'll have a landing place and a launching place to develop their PA Semi team.

Meanwhile, the inclusion of Intel is actually a benefit, because not that many companies can grab a large stake (as others have mentioned). Apportioning different key technologies among the different competitors so that fewer companies hold all the pieces thwarts collaboration of competitors against Apple.

Finally, this plays into their plan to establish their open graphics platform. Even if Apple uses proprietary chips, having the leading mainstream company for a niche industry helps to insure adoption...superior standard on superior mainstream hardware.
post #30 of 32
Quote:
Originally Posted by nudua View Post

Wrong. Monopolies are bad because the can command higher prices from customers (Microsoft back in the day).

Monopoly earned because a company provides a superior product or service isn't bad, that's a free market monopoly. In that case competitors need to produce a competitive product. What MS did to gain its monopoly was not because of free market choice.

Quote:
However, nationalization is inherently an evil response. You may think that it is better that the government own the company instead of its stockholders.

But a nationalized company will be a snare for the leaders of the government. Most politicians are already corrupt, but now being in charge of companies conducting business, their level of corruption will increase drastically. And the free market, ie. the people, will suffer more greatly.

As though corporate executives aren't corrupt? They go to jail more regularly and frequently than politicians. The reason the government has had to use nationalization is because of corporate greed, shortsightedness, and mismanagement that would cause the collapse of those industries. The fear that such a collapse would be catastrophic to our already severely weakened economy.

Politicians can be impeached or voted out of office for improper conduct. Those corporate executives willing to run their companies into the ground to increase profits, putting hundreds if not thousands of people out of work. Who do they answer to?

Quote:
Business and politics does not mix well, just look at third world countries. Unfortunately, this wisdom is lost in today's media and we may just look at ourself (the US government) in a few years to see another example of increased corruption when politicians get their hands on businesses.

Government has to work to keep business honest. This relationship has been shown to work within other western democracies. The key is that business has to show some willingness to not be excessively greedy and work towards the benefit of common good. US business has proved time and again the willingness to put profit over everything.

Quote:
(also, take a look at Fannie Mae, Freddie Mac to see that politicians should not get involved in business, lots of corruption in form of nepotism to see, and don't get me started on the Federal Reserve).

These problems come directly from business deregulation under Ronald Reagan in the 80's, these problems did not arise directly because of government involvement in the private industry.

Fannie Mae and Freddie Mac had nothing to do with major national banks giving loans to anyone with pulse and a signature.
post #31 of 32
Quote:
Originally Posted by brucep View Post

Where or what MSFT would they put those chips in ??

Zune and Zunephone.
post #32 of 32
Quote:
Originally Posted by solipsism View Post

That would be an illegal monopoly, and yes those are bad, but to simply force a successful company to break apart because it has obtained a legal monopoly by being better than other competition is not fair.

If a company develops a product that works itself into becoming a monopoly, then the government won't stop it, because it developed naturally.

But they won't allow companies buy their way into a monopoly, at least not in the States.
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