ARM is leading a consortium spending the lion’s share of the money – $350m – on buying a warchest of 580 patents from the Silicon Valley company.
The remaining $60m has been spent by Imagination on MIPS’s operating business and its remaining 82 patents.
Yesterday’s development is a defensive move from ARM, which is looking to maintain its dominance in designing the processors used in phones and tablets.
Meanwhile, Imagination’s part of the deal was seen as a very bold step. While Imagination is a market leader in the graphics chips used in devices such as Apple’s iPhone, the MIPS deal signifies a potentially risky move into the territory dominated by ARM and US giant Intel.
MIPS was a major player in the processor business in the early years of the 21st century, designing technology used in Sony’s PlayStation 2 console and blu-ray players, but has slipped behind ARM as smartphone sales began to take off. Investec analyst James Goodman downgraded Imagination from a “buy” to a “hold”. He said: “We see increased strategic risk as Imagination attempts to achieve what MIPS could not, whilst also continuing to defend its leadership in graphics technology.”