Millions wiped off UK chip designer’s capitalisation
Britain’s Imagination Technologies saw its shares plummet more than 6 per cent in London tonight [14th January 2013] after it was revealed how key customer Samsung could be using rival technology in its new smartphones.
The news saw around 30 pence wiped off Imagination’s stock, making the company the second-biggest decliner among firms listed in the FTSE 350 index. Millions were also wiped of its cap.
Just before Christmas Imagination, whose CEO Hossein Yassaie was recently knighted, revealed how higher research costs were weighing on profits, a factor that also dragged down the share price towards the close of 2012. Adding to its cash flow problems is its out-bidding of rival US chip maker CEVA for the rights to the patents library of MIPS, a victory that’s costing it $100 million.
Meanwhile Simon Schafer, an analyst at Goldman Sachs, has cited “anecdotal evidence” indicating Korean giant Samsung’s new generation smartphones will incorporate intellectual design technology licensed not from Imagination but arch UK rival ARM and based around the Mali-T604 Graphics Core.
For its part, Imagination has already vowed to accelerate investment in graphics with Yassaie declaring the initiative will bear fruit around summer 2013.
Imagination is said to control around half the market for graphics chip designs globally. Every day on average, factories are claimed to be churning out 1.5 million smartphones, tablets and other devices using the company’s graphics and video technology.