UK Edition
Apple sets up new UK office on Imagination's doorstep amid chip row
Apple has raised the stakes in its bitter stand-off with Imagination Technologies by opening an office on the British microchip company’s doorstep.
The Silicon Valley giant has planted its flag by renting a 22,500 square-foot office in St Albans, a stone’s throw from Imagination’s headquarters. It plans to use the office to develop its own graphics technology as it ditches Imagination, leading to fears that it will poach the British company’s most talented staff.
The development is set to heighten tensions between the companies, exacerbating fears that Apple is seeking a quasi-takeover of its supplier by hiring its employees and weakening the company’s hand as the two tussle over Apple’s plans to ditch the company.
Imagination, once a star of the UK tech scene, was thrown into turmoil in April when it emerged that Apple plans to stop using the Imagination graphics technology that powers the iPhone.
Apple accounts for half of the London-listed company’s revenues and without further payments Imagination will struggle to survive. Its shares slumped by 62pc when the news emerged, and the company put itself up for sale last month.
The two are now locked in a public war of words over the matter. Imagination has challenged Apple’s claim that it will be able to develop its own technology without infringing on Imagination’s technology, and is pressing for it to continue paying royalties. Last week its chief executive Andrew Heath branded Apple unethical and claimed the episode had unsettled staff.
Apple has denied that it has pulled the rug out from under Imagination, saying the company has known for years that it is winding down the relationship. It has labelled the company’s conduct “inaccurate and misleading”.
Apple has hired a string of Imagination employees in recent months including its former chief operating officer John Metcalfe, who have been placed staff at the iPhone giant’s main UK office in London or in California. More than a dozen further job postings on Apple’s website for experts in graphics hardware now advertise for roles in South Hertfordshire.
The new office in the centre of St Albans sits a few miles from Imagination’s base in the adjacent Hertfordshire village of Kings Langley. Apple is preparing to open a new UK headquarters at the former site of Battersea Power Station, but it will not be open until 2021.
Imagination’s technology forms the basis of the graphics chip that feature in every iPhone, iPad and Apple Watch but Apple is seeking to design its own as it takes greater control over the components in its devices. Powerful graphics units are central to fast-growing technologies like virtual and augmented reality and artificial intelligence.
Mr Heath said last week that Apple will continue to need access to at least some of its patented technologies given its long reliance on them, saying claims that the US company will be able to go it alone are “unsubstantiated”.
Apple says Imagination has had two years’ notice that the relationship will be wound down, disputing Imagination’s claims. “We valued our past relationship and wanted to give them as much notice as possible to adapt their future plans. We’re disappointed in their response, which has been inaccurate and misleading,” a spokesman said.
Analysts say Imagination is not a viable business without royalties from Apple. Potential bidders for the company include Intel, Qualcomm and ARM Holdings.