Apple Sets Up New UK Office at Imagination’s Doorstep

Apple Inc has raised the stakes amid a bitter standoff with Imagination Technologies, a Britain-based micro-chip company, focusing on semiconductor and related intellectual property licensing, by opening a new office on the company’s doorstep.

The Silicon Valley tech giant has planted its flag by renting 22,500 square-foot office in St. Albans, a stone’s throw form Imagination’s headquarters in Hertfordshire village of Kings Langley, according to a report on Sunday. Apple plans to use the office to create its own graphics technology for Apple products as it ditches Imagination. The new office is just eight miles away from Imagination’s office.

The development is expected to increase tensions between the companies, worsening fears that Apple is looking for a quasi-takeover of its supplier by hiring its talented employees and weakening the company’s hand as the two struggle over Apple’s plans to leave the company.

In recent months, Apple has hired a string of Imagination employees, 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 Caifornia. More than a dozen further job postings on Apple’s website for experts in graphics hardware now advertise for roles in South Hertfordshire.

The two companies are in the middle of bitter dispute after Apple told Imagination Technologies that it would no longer use its graphics chip technology in iPhones and iPads, and instead will make its own.

Apple accounts for half of the London-listed company’s revenues and without further payments Imagination will struggle to survive. Its shares decreased by 62% when the news arose, and last month, it put itself up for sale.

Imagination argued that Apple will not be able to develop its own graphic technology without infringing on its IP. Last week, its chief executive Andrew Heath branded Apple unethical and claimed the episode had unsettled staff.

Imagination’s technology forms the basis of the graphics chip featuring in every iPhone, iPad and Apple Watch. Powerful graphics units are central to the fast-growing technologies like virtual and augmented reality and artificial intelligence.

Apple said that it has given Imagination a two-year prior notice regarding the end of the partnership.

“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,” Apple’s spokesman said.

Apple is set to open a new UK headquarters at the former site of Battersea Power Station, but it will not be open until 2021.

According to analysts, Imagination is not a viable business without royalties from Apple. Potential bidders for the company include Intel, Qualcomm and ARM Holdings.

Meanwhile, Apple Inc. traded traded 0.99%, or 1.42, to $144.15, by 4:18 AM GMT-4. It opened in $142.90, with a session high of $144.75, and a session low of $142.90. Its market capitalization was $759.21 billion, its P/E ratio was 16.86, and its dividend yield was 1.75%.

Imagination Technology Group Inc. traded  1.31%, or 2, to GBX 154.75, by 8:15  AM GMT+1. It opened in GBX 152.50, with a session high of GBX 153.75, and a session low of GBX 152.50. Its market capitalization was GBX 437.20 million.

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