Apple to cut royalty rate payments to Imagination Technologies by two-thirds

Apple will probably pay graphics chip designer Imagination Technologies just one third of its current royalty rate as the smartphone giant wind downs their supply deal over the next two years, according to estimates by the UBS research group — as noted by Reuters.

UBS analysts predicted that Imagination would become loss-making by fiscal 2019 without any Apple royalty contributions. They add that the British chip designer will have to consider potential cost-cutting moves to redress the balance.

According to the Financial Times (which requires a subscription), Apple plans to stop using Imagination Technologies intellectual property within two years, ending its royalty payments. The tech giant is working on its own custom graphics architecture to control more of the core technology, in the same way that it already architects custom CPU silicon design.