Imagination Technologies, a leading supplier of graphics processing unit (GPU) technology, announced that it plans to lay off 20% of its staff, according to sources familiar with the matter. The company, which signed an agreement to supply Apple with chip technology in 2020, said it was cutting the staff because of a challenging “business environment” over the last 18 months, according to an internal message reviewed by Reuters.
The company did not disclose the exact number of employees affected by the decision, but according to a recent filing with U.K. regulators, it had 559 staffers at the end of 2022. In the U.K., as many as 130 jobs were at risk, one of the sources said.
Imagination Technologies is known for its PowerVR GPU technology, which is used in smartphones, tablets, smart TVs, and other devices. The company competes with Arm Holdings, which recently went public, and Nvidia, which is in the process of acquiring Arm.
The company’s relationship with Apple has been turbulent
Imagination Technologies’ fortunes have been closely tied to Apple, which is one of its biggest customers and shareholders. Apple uses Imagination’s GPU technology in its iPhones, iPads, and other products.
However, the relationship between the two companies has been turbulent in recent years. In 2017, Apple announced that it would develop its own graphics technology, which sent Imagination’s shares down 70%. Imagination accused Apple of breaching its contract and threatened to sue.
The dispute was resolved in 2020, when the two companies signed a new multi-year license agreement, which restored Imagination’s access to Apple’s lucrative market. However, the details of the deal were not disclosed, and it is unclear how much revenue Imagination generates from Apple.
The company is owned by a Chinese-backed private equity firm
Imagination Technologies was acquired by Canyon Bridge, a private equity firm backed by the Chinese state-owned China Reform holdings, in 2017. The deal raised concerns about the potential transfer of sensitive technology to China, which has been accused of stealing intellectual property from Western companies.
The U.K. government approved the deal after Canyon Bridge agreed to keep Imagination’s headquarters in the U.K. and maintain its research and development activities there. However, some lawmakers and former employees have expressed doubts about the firm’s independence and transparency.
In April 2020, Imagination’s board was reportedly pressured by Canyon Bridge to appoint four new directors with links to China, which sparked a backlash from the company’s senior executives and the U.K. government. The move was eventually abandoned, and Imagination’s CEO Ron Black and Chairman Ray Bingham resigned shortly after.
The company faces a challenging and evolving market
Imagination Technologies said in a statement that it was taking the “steps necessary to adapt to the challenging and evolving market” and declined to comment further1. The company did not specify the reasons for its difficulties, but some analysts have suggested that it could be facing increased competition, reduced demand, or lower royalties from its customers.
The global semiconductor industry has also been affected by a supply chain crisis, which has caused shortages and delays in various sectors, such as automotive, consumer electronics, and cloud computing. The chip shortage has been exacerbated by the COVID-19 pandemic, which disrupted production and increased demand for digital devices.
Imagination Technologies reported a profit before tax of £17 million ($20.9 million) on revenue of £120.3 million for the year 2022, according to filings. The company has not released its financial results for 2023 yet.
