Apple sucker punches Imagination Technologies. Can the UK chip designer hit back?

The US computer giant plans to make its own graphics chips rather than relying on Imagination's designs, but the UK outfit says it doesn't think Apple can do that without infringing its patents

iPhones currently contain chips based on Imagination Technologies' designs (Getty Images)

Talk about a bad start to the week: Apple has brought the hammer down on chip designer Imagination Technologies, saying it doesn’t plan to use the UK company’s kit for very much longer.

The tech giant had licenced Imagination’s graphics technology in the iPhone and other products, paying royalties for the use of its designs.

Apple is also a big shareholder, and even talked about buying the business a while back. Instead it bought some Imagination Tech staff, a number of whom have joined the business during the last couple of years. It’s cheaper that way.

Naturally Imagination is not best pleased, and has questioned whether Apple can, in practice, manage to produce its own chips without in some way infringing upon its patents.

“Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination's technology, without violating Imagination's patents, intellectual property and confidential information,” it growled, in an announcement to the stock exchange.

And there was an explicit threat at the end: “Imagination has reserved all its rights in respect of Apple's unauthorised use of Imagination's confidential information and Imagination's intellectual property rights.”

Cue another one of those patent lawsuits that seem to be endemic to the tech industry? A dream ticket for some ambitious lawyer working for a big London firm?

That’s one possible outcome. Trouble is, while Samsung Vs Apple (they fought a ding dong battle over design patents that reached the US supreme court last year) was like Ali vs Frazier, Imagination Technologies vs Apple looks like throwing flyweight Andrew Selby into the ring with one of the Klitschko brothers. With one hand tied behind his back.

Why the latter? Not only is Imagination a mere fraction of Apple’s size with a mere fraction of its resources, Apple’s decision also takes away half its revenues and nearly all of its profits.

The company does have other customers. But there’s a reason it described its contract with the US giant as “essential” to its future.

The only chance for our corporate Selby is if it can make a sufficiently strong case, sufficiently quickly, with the help of its lawyers to get Apple to the table. It needs to sucker punch its customer and force some sort of deal.

Stranger things have happened. And it would be fun to see. You could even imagine those takeover talks being restarted.

Imagination doesn’t appear have many other options right now, and those that it does have don’t look all that good.