The news this week that Apple intends to start using its own GPUs starting in eighteen month’s time has left a lot of people wondering if IMG can survive this latest blow. Last year, remember, IMG cut loose a lot of employees, including CEO Hossein Yassaie (and myself) and then posted a huge loss before selling off chunks of its business, such as the Pure digital radio business.
As usual, there is a lot of hyperventilation from people who you might expect to have steadier nerves but this is a defining moment for IMG, which has never really found itself after the ill-advised acquisition of MIPS back in 2013. Apple makes up about half of IMG’s royalty revenue and it would be difficult for any company to recover from the sudden removal of that sort of income but that’s not what is happening. Let’s look into the details a little.
First some background; Apple has been hiring GPU architects and designers for years now. They snagged some big names, such as Bob Drebin and Raja Koduri from AMD way back in 2009, and there have been persistent rumors (although not from people who know anything about the subject) that Apple has been busily designing its own GPUs all these years. There’s no doubt that they are capable of doing such a thing and have now announced they will be ready within a couple of years to do just that but, 8 years later and some of the best GPU architects on the planet are only just starting to produce results? Not very likely. In fact, Koduri went back to AMD in 2013 - with a great job offer, no doubt - but also because I believe he was not getting to design GPUs at Apple.
The role of Drebin and company seems to have been to drive the GPU suppliers of choice, Intel and IMG, to continue to excel at their jobs, and to ensure that the GPUs they produced were properly tailored to Apple’s needs. (I believe this was one of the sources of IMG’s problems; more on that later). Although they do seem to have been adding functions adjacent to graphics, Apple were taking IMG drivers and using them unmodified, certainly until last year and probably still to this day. That fact alone should put a stake through the heart of any argument that they have been using non-PowerVR graphics (or whatever it is you need to do to kill off zombie ideas that refuse to lie down).
So, something happened fairly recently that caused Apple to decide they needed to get into the GPU business themselves and that event is fairly obvious. Things weren’t going well at IMG for several years and it is clear that numbers of key employees were looking for places to go. It’s inconceivable that they didn’t approach Apple (in fact a key senior person did join Apple in late 2015) and then last year the IMG board pushed out a CEO that Apple felt they could rely on. Two and a half years from design start to chip integration for a new architecture GPU sounds about right to me: that right there – April 2016 - is when Apple kicked off their GPU design project.
Oh, by the way, if you ask me what all those engineers and architects have been doing in the meantime? Building vision accelerators, of course! In common with almost everyone else, they see that as the prime strategic investment and held off diverting resource from it for as long as possible until IMG’s problems last year forced their hand. This also gives the lie to the narrative of Apple as the faithless monster; I’m sure they are as ruthless as any other business but no more so and not in this case.
So, what now for IMG? All that guff about patents is just hot air; sure, they have lots of patents but with at least a dozen other GPU companies successfully negotiating the so-called patent minefield, to suggest that Apple is incapable of doing the same is just laughable. That really doesn’t matter, though because they are not going to implode and with a steady hand can turn this around – although I do think that acquisition in about three years is the best they can aim for.
First off, Apple revenues will continue unchanged for the eighteen months it will take them to introduce their own device and there will be a long tail of royalty-producing products stretching out after that. The only immediate effect will be the loss of the annual license fee (and they might even be able to protect that) so IMG need do absolutely nothing right now and in fact, if they have the nerve, they can seize the moment.
Remember I said earlier that being driven by Apple has been a huge problem? Always being pulled to service their biggest customer, always being pushed to design GPUs that satisfy Apple‘s needs, and to design them first, has been a huge burden for the company. IMG’s business had always been run on a relationship basis and this suffered under the stress of working for Apple. Multiple opportunities were sacrificed in this way.
Free of that burden, IMG can now refocus their GPU design effort on products the rest of the market wants and also take the enormous engineering resource sucked up by Apple support and put it into vision - the strategic investment they have consistently failed to address.
There are a few other things the company needs to do, such as finish cutting loose businesses they have no chance of succeeding at but overall, I don’t see them as being dead yet. The big unknown is the management: this is not a time for caution. IMG is back into startup mode and this is when big ideas and big risks come into play. It could be there are too many suits and not enough rolled-up sleeves.
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