The basic news: https://arstechnica.com/business/2017/04/apple-ditches-imagination-technologies-shares-collapse/
More detail/context/background: http://www.anandtech.com/show/11243/apple-developing-custom-gpu-dropping-imagination
Basically, Imagination Technologies is an IP-only company who designs the SGX series of GPUs currently used in all Apple iOS based devices. Apple informed them that in about two years, they have no further use for Imagination's IP - meaning they will be designing their GPUs in-house from scratch. That led Imagination to issue this rather pointed press release where they publicly threaten Apple:
Imagination Technologies Group plc (LSE: IMG, “Imagination”, “the Group”) a leading multimedia, processor and communications technology company, has been notified by Apple Inc. (“Apple”), its largest customer, that Apple is of a view that it will no longer use the Group’s intellectual property in its new products in 15 months to two years time, and as such will not be eligible for royalty payments under the current license and royalty agreement.
Apple has used Imagination’s technology and intellectual property for many years. It has formed the basis of Graphics Processor Units (“GPUs”) in Apple’s phones, tablets, iPods, TVs and watches. Apple has asserted that it has been working on a separate, independent graphics design in order to control its products and will be reducing its future reliance on Imagination’s technology.
Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination’s technology, without violating Imagination’s patents, intellectual property and confidential information. This evidence has been requested by Imagination but Apple has declined to provide it.
Further, Imagination believes that it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights, accordingly Imagination does not accept Apple’s assertions.
Apple’s notification has led Imagination to discuss with Apple potential alternative commercial arrangements for the current license and royalty agreement.
Imagination has reserved all its rights in respect of Apple’s unauthorised use of Imagination’s confidential information and Imagination’s intellectual property rights.
Imagination's shares are currently down about 62% compared to yesterday on the news.
Some small questions remain - will the new architecture be TBDR, will it support PVRTC, what will compatibility be overall, etc. At a broad scale however, the announcement is perhaps not that surprising. Apple's been aggressive about developing their own chip IP (their CPUs are in-house ARM-compatible designs) and has been aggressively hiring GPU engineers for some time. They also control their own graphics API, Metal, and are generally well poised to compete in this market.
As an addendum, I'll note that it would be crazy to design your own GPUs and not anticipate scaling up to all classes of devices. A move to a new CPU design or architecture is hard, but a move to a new GPU is not. It's not unreasonable to believe that Apple is evaluating doing custom GPUs across the product line to replace licensed or purchased silicon. A few more years might bring us Macbook series laptops with Apple GPUs too.
