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As ARM Holdings pumps up its GPU product, Imagination Tech. strikes back with bold move

Imagination Technologies Group plc (LON:IMG) has long waited on the sidelines of the smartphone industry, playing a pivotal role as wingman to the likes of Intel Corp. (INTCand domestic peer ARM Holdings plc (LON:ARM).  But after years of success making GPU cores to accompany various mobile/lightweight CPUs, Imagination Technologies is eyeing a shift into the leading role.

I. GPU Giant Goes CPU

The company on Tuesday announced that it would be acquiring U.S. chipmaker MIPS Technologies Inc.'s (MIPS) business operations unit, plus part of its patent portfolio for $60M USD (£37.6M).

The patent pickup isn't of particular concern to ARM Holdings, which just signed a cross-licensing deal with MIPS.  Under the relatively complex plan, the soon-to-be-acquired MIPS unit will retain 82 core patents on its architecture, but will sell its remaining 498 more ubiquitous patents to "Bridge Crossing", an ARM Holdings subsidiary, for $350M USD.  The MIPS unit will retain permanent royalty-free licensing rights to these patents, so it doesn't have to worry about getting sued with its former IP anytime in the future.

PowerVR GPU
Imagination Tech. makes the PowerVR GPUs found inside the iPad and other products.
[Image Source: IBTimes]

The concern part of the detail for ARM Holdings is the pickup of the chipmaking unit. Imagination Technologies has expressed the desire to be an "industry-leading force" in the mobile CPU market, challenging its current partner ARM Holdings.

Comments David Harold, Imagination Technologies spokesman, to the BBC, "We think that it strengthens our line-up and offers more choice.  ARM are obviously very strong in the CPU space and we have been niche.  But by bringing MIPS into our business we think it will become a strong alternative in the CPU market."

II. A Tough Road Ahead

ARM Holdings main advantage -- and the key challenge facing Imagination Technologies -- is the lack of MIPS products in the mobile market.  While Android (Linux-based) tablets can run on MIPS processors [dev info], there are only a handful of products (an e-reader or two) that use the alternative reduced instruction set computer (RISC) architecture.

Android MIPS
A few Android tablets run MIPS, but not many.

MIPS chips do have substantial market share in networking applications, and a growing stake in the digital television business.  But translating those successes into a legitimate challenge of the RISC king of mobility, ARM Holdings, will be challenging, to say the least.

James Goodman, an analyst with Investec plc (LON:INVP), a London-based banking an asset management group, asserts, "MIPS has good standing, we understand, in areas such as networking and digital TVs.  Imagination expects to broaden the strategy towards the mobile segment, whilst at the same time we are seeing ARM aggressively target the networking and DTV segments."

"We therefore believe the competitive pressure has increased significantly, whilst the risk to the strategy is also considerably greater.  The cash cost is $60m and we assume there will be further exceptional costs in combining the businesses."

III. Move Has a Survivalist Aspect to it

So why would Imagination adopt such a risky ploy?

First, there is great reward if it pays off -- even with a small stake of the exploding mobile market.  ARM Holdings has been posting wildfire profits and booming growth; Imagination Technologies is likely surely salivating at the prospect of similar performance if its new effort sees success.

ARM
ARM has made a killing off smartphone CPUs. [Image Source: ARM/Facebook]

Secondly, ARM Holdings struck first, stepping up its GPU efforts with its Mali product line.  While Imagination Technologies' PowerVR GPU cores are still heavily used by certain OEMs (such as Intel), ARM Holdings has scored some key design wins, such as the Nexus 10 tablet from Google Inc. (GOOG) and Samsung Electronics Comp., Ltd. (KSC:066570).  

Imagination Technologies likely weighed the risk of marginalization in the GPU market carefully against the risk of entering a new and hostile market (CPUs).  Analysts may not predict Imagination Technologies to see success in this new market, but most analysts do agree that there are design advantages to getting your CPU and GPU intellectual property cores from a single source.  Thus if Imagination Technologies didn't act it may have been slotted for a slow demise; as is, it has positioned itself in the role of the feisty underdog.

Sources: MIPS Technologies, Imagination Technologies, BBC News



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RE: Competetion is good
By KC7SWH on 11/7/2012 1:59:23 PM , Rating: 2
I have a low end tablet with an MIPS processor an it sucks because there are a lot of Android apps that wont run on it. The ones that do Google play says won't work but if you download them from the developers site sometimes they do work.


RE: Competetion is good
By nafhan on 11/7/2012 4:50:31 PM , Rating: 2
quote:
I have a low end tablet with an MIPS processor an it sucks because there are a lot of Android apps that wont run on it.
Did you have compatibility problems with anything other than games? My relatively limited experience indicates games tend to be the main problem area.

It'd really be interesting to know how much of that is due to it being "low end" and how much is due to it being MIPS. There's a number of Android apps that wouldn't run on my old phone (single Scorpion), but do run on my new one (dual Krait).

It'd also be interesting to see how x86 Android compares to MIPS Android on compatibility. Being RISC based (along with other similarities) seems like it would give MIPS a leg up over Intel.


RE: Competetion is good
By ajfink on 11/7/2012 8:22:38 PM , Rating: 2
I'd say x86 has a leg up in this regard due to the amount of time and money Intel has poured into making Android fully compatible.


RE: Competetion is good
By tat tvam asi on 11/7/2012 11:06:11 PM , Rating: 2
Why didn't Intel think of buying MIPS? They had better chances of taking in ARM in the mobile space with MIPS than with x86 -- my opinion anyway.


RE: Competetion is good
By someguy123 on 11/8/2012 1:11:22 AM , Rating: 2
Because they're gradually reducing the performance/power cost of x86 with each node shrink. They can't compete yet but they're getting pretty close.


RE: Competetion is good
By Alexvrb on 11/7/2012 8:48:07 PM , Rating: 2
Any native code (built using NDK) compiled for ARM only will not work out of the box on other architectures. There are other issues but this is a big barrier. Emulation is a possible way around this, although it takes quite a bit of effort. On top of this, if an app was compiled using the NDK (for ARM or x86) that indicates that they really needed the performance, and you're going to take a huge hit by emulating. So you'd have to be twice as fast just to run such an app normally.

These days they can compile apps using NDK to a fat binary with x86/ARM packaged together. So it's looking better for Intel there, assuming the developer is forward-thinking enough. But MIPS? I don't think Google supports them with the NDK. So MIPS Android, even if it was a modern Android version and was ported beautifully, would still only run SDK apps. Even then how well things work depends on underlying hardware, drivers, and how solid their MIPS Dalvik VM is.


RE: Competetion is good
By BifurcatedBoat on 11/8/2012 1:43:21 PM , Rating: 2
Since games tend to be more performance-sensitive, it's more likely that a game will include native code as opposed to pure Java.

Java is an interpreted language, so a Java application can run on any platform that has an interpreter.

Native code on the other hand is compiled directly for an instruction set. In most cases, all the application developer would need to do is recompile the native code to target the MIPS instruction set and make that available, but they may not have devoted any attention to it because of the scarcity of devices using a MIPS processor.


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