Is AMD Secretly Helping Apple Build Its Own Graphics Processors?

Summary

• Apple confirmed last year that it held discussions previously with Imagination Technologies regarding possible purchase of the British GPU supplier for the iPhone/iPad.
• Hopefully by bullying Imagination Technologies, Apple could buy the British firm at a much lower valuation. Imagination Technologies has put itself for sale last June after Apple dumped it.
• Apple told Imagination that it won’t be licensing/using its GPU anymore last March. Imagination derives 50% of its revenue from Apple.
• Advanced Micro Devices is my number one suspect on who is probably helping Apple build its own mobile GPUs.
• Apple proved itself an outstanding builder ARM-licensed processors. Apple could also turn out to be an top-notch builder of GPUs.

Can Apple really build its own GPU (Graphics Processing Unit) without infringing Imagination Technologies, Limited’s (OTCPK:IGNMF) (OTC:IMGTY) patents? As far as I know, Apple has no patents or original IP on GPU-related technology/products. Apple always used/licensed Imagination’s PowerVR mobile GPU patents/technology inside its ARM-based System-on-Chip A-series of mobile application processors.

I was therefore surprised that Imagination announced last April that Apple decided to end its licensing of PowerVR GPU technology. Apple is apparently designing its own in-house GPUs for future iPhone and iPad models. Being dumped by Apple has resulted in Imagination’s stock to drop notably, so much so that Imagination has put itself up for sale last June 22.

(Source: Google Finance)

By dropping the licensing/supply business from Imagination, Apple cut off 50% of that British company’s revenue. Apple’s subsequent bully moves against Imagination are good. The iPhone maker building a new GPU-centric development team in Britain, Imagination Technologies’ home turf, best exemplifies Apple’s unrelenting aggressive stance against Imagination.

Apple confirmed last year that it previously held talks about possibly buying Imagination Technologies. Nothing came of those old talks. Now that Imagination Technologies is up for sale, it might be more amenable to whatever Apple offers it. Apple is a stakeholder in Imagination. It could offer to buy 100% Imagination Technologies at pre-April 3, 2017 valuation and every current shareholder will gladly accept it.

My initial suspicion is that Apple was simply bluffing that it could build its own GPU. It might be a clever bullying move to intimidate Imagination Technologies to sell itself at an affordable price.

However, I am not also discounting the possibility that Apple acquired help or assets that we don’t know yet which could help it build its in-house GPU. They easy dumping of Imagination told me that Apple definitely has a secret helper who is assisting it.

My Usual Suspect, AMD

If ever Apple can really create its own GPU, somebody must still be helping it. Like I said earlier, I am not aware that Apple has original IP related to graphics processors. My number one and only suspect is Advanced Micro Devices (AMD).

This is speculative but Apple has exclusively been using AMD-made Radeon GPUs for its Mac computers for the last two or three years. Tim Cook did not do it out of his generosity. AMD could have offered something valuable to Apple which helps it monopolize GPU requirements of Mac computers.

AMD sold its mobile GPU subsidiary to Qualcomm (QCOM) in 2009. However, we cannot forget that AMD still owns some patents and technologies which could really boost Apple’s ambition build its own GPUs. Qualcomm’s Adreno GPUs are considered the most potent rivals of Imagination’s PowerVR graphics. Those Adreno GPUs were made possible by Qualcomm’s purchase of AMD’s mobile GPU division.

Further, two years ago, there was also a rumor that AMD might be licensing its Radeon GPU technology to MediaTek. MediaTek builds ARM-based SoCs, not x86 processors. AMD obviously has the technology and patents to license out GPU technology to anyone interested, Apple included. Nothing happened out of that rumor.

Apple told Reuters that it already informed Imagination Technologies, in 2015, that it was dropping it as a supplier. I never heard of that news in 2015. Did we all get flash-banged (fooled) two years ago? Maybe it was not MediaTek but Apple who was really interested in licensing mobile Radeon GPU technology.

I got no supporting documents/links to prove this suspicion. I do not think Tim Cook will reply to my email or SMS. Nevertheless, Seeking Alpha is not a financial news site. It is a crowd-sourced, advertising-dependent online platform for individual to share their subjective (not objective) investment-related opinions and I’m sharing this one now.

Final Thoughts

The industry-leading GPU performance of PowerVR-equipped SoCs is why the iPad/iPhone is my favorite mobile gaming device. Imagination Technologies technology definitely helped Apple build the best GPU/CPU A-Series mobile application processors.

Now Apple has something up in its sleeves, an Ace card that we don’t know about, which made it very easy to dump Imagination Technologies. Imagination provided the GPUs that helped Apple’s A10x/A9x Fusion SoCs compete against Nvidia’s Tegra X1 SoCs and yet Apple found it no longer needs PowerVR.

(Source: Notebook Check)

I think the 2015 warning to Imagination Technologies is believable. Two years ago Apple probably already got some help or technology/patents that made it confident enough to announce this year that it is indeed making its own GPUs.

Apple has proven itself an excellent builder of ARM-licensed mobile application processors. Maybe Apple can also prove itself as an outstanding builder of GPUs.

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Disclosure: I am/we are long AAPL, GOOG, MSFT, NVDA, AMD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.