Shares in Imagination Technologies fell nearly six per cent today as its future remains uncertain following its biggest customer Apple saying this week it will end a contract with the UK chip designer.
Imagination's shares plunged 60 per cent on Monday after news broke that Apple plans to develop its own technology. The share price fall led to Imagination’s market capitalisation fall from £754m to £290m.
However, shares rose 12 per cent yesterday after analysts said Imagination is a takeover target and could attract buyers from China. In the past, Apple has come close to buying Imagination.
Analysts at Credit Suisse said: “Given Imagination’s graphics offering and its portfolio of patents around it, we believe there is an increased probability of M&A interest especially from China."
On Monday, shares in Imagination plummeted 70 per cent in morning trading and closed 62 per cent down at 103p, their lowest level since 2009.
Imagination argued that its technology was key in forming graphics processor units (GPUs) in Apple’s phones, tablets, iPods, TVs and watches.
Read more: Here's what the analysts are saying
Imagination said: "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."
Imagination is in talks with Apple to discuss alternative commercial arrangements for the current license and royalty agreement.