In an explosive press release this morning, Imagination Technologies revealed that Apple, a long-time customer of its GPU designs, will no longer be using PowerVR GPU technology in its A-series SoCs. Imagination says that Apple will wind down its usage of PowerVR graphics IP within "15 months to two years time." That move will end Imagination's revenue stream from royalties on Apple SoCs.
According to Imagination, the reason for this split is that Apple will be working on its own graphics processor technology for future A-series SoCs. That in-house development "will be reducing [Apple's] future reliance on Imagination's technology," according to the press release. That unusually frank disclosure from an Apple supplier might suggest that Apple's in-house GPU development is yet to come, but we've known that custom development work has been under way for some time already. David Kanter showed that Apple is shipping a custom-designed shader ALU in the A10 SoC's GPU late last year.
This parting of ways will likely be rancorous. Imagination doesn't believe that Apple can carry out its mission to bring GPU development in-house without violating or replicating a wide swath of its "patents, intellectual property, and confidential information." Imagination is also skeptical that Apple has the chops to design a ground-up GPU architecture without infringing on its intellectual property. Accordingly, Imagination "does not accept Apple's assertions" that it can carry out this work without relying on Imagination's know-how.
Should Apple be able to cut its ties with Imagination, the move would be a huge blow to the firm. Imagination called its Apple contract "essential to the business of the Group" in its 2016 financial report. Of the £120 million in revenue Imagination took in for its fiscal 2016, Apple represented £60.7 million of the pie. Imagination stock is down about 64% as of this writing.