apple
Reuters

After failing to come to mutual terms, Apple's British graphics chip manufacturer has announced that it is pursuing a "dispute resolution procedure" with the Imagination Technologies. The announcement surfaced after Apple expressed its intentions to produce its own graphics chip.

Apple cutting ties

The Cupertino firm said that the situation tensed up after the two firms failed to come to terms over licensing issues. According to the British firm, Apple had notified them last month that it is cutting ties with them and "would no longer use Imagination's processing designs in 15 months to two years' time" because it is making its own graphics chips.

Upon knowing about Apple's decision, the chip manufacturer had resorted to sit down with the company and settle in amicable "alternative commercial arrangements" for the existing license and royalty agreement as it believes that it is impossible for Apple to come up with its own chip without violating patents of Imagination in some form.

"Imagination has reserved all its rights in respect of Apple's unauthorised use of Imagination's confidential information and Imagination's intellectual property rights," it said in its press statement.

Legal action looms

Imagination Technologies has been producing Apple's graphics chips for iPod, iPhone, and iPads since the beginning and has become its biggest client by far. Reuters also reported that the chip maker has been getting a fair amount of money from each Apple device.

Should Apple refuses to give into Imagination's demands and the latter pursues its own path after company deal expires in two years' time, legal action could ensue, Reuters reported. The British company is still optimistic that both the companies will be able to solve this issue and come up with an amicable settlement "through a more structured process".

Businesses for sale

Imagination said that 50 percent of its annual revenue comes from Apple. With Apple planning to cut ties with Imagination in the future, the latter sees a major decrease in its income, forcing the management to put its two other businesses on sale.

The company has decided to let go of its embedded processor technology MIPS and mobile connectivity unit Ensigma and expand its full-swing efforts on graphics chip PowerVR. The businesses on sale are expected to gain £21m from May to October 2016.