Imagination Technologies is taking a tumble on worries about future growth.
According to analysts, the chip designer has been replaced by Arm in one of Samsung's new chips, while a slowdown at Apple (which reports results later) would also be bad news for Imagination. Eoin Lambe at Liberum Capital said:
Arm has displaced Imagination for an important GPU design at Samsung LSI [large scale integrated circuits]. Samsung's new Exynos 5 Octa chip relies on Arm's Mali-T628 GPU, while the previous version used an Imagination's GPU. Samsung is a high volume chip vendor and is therefore an important customer. The loss of this socket plus the slow down at Apple (Imagination's largest royalty payer) will drag on Imagination's future royalty revenue.
Lambe kept his hold recommendation, but Imagination is currently down 24.4p at 258.4p. Meanwhile Arm, which reports on Wednesday, is 1p lower at 905p. On Monday rival Intel said it planned to launch a low-power version of its server processors, which could head off the likes of Arm which are moving into the server market from smartphones and tablets. Intel meanwhile is moving in the other direction, raising competition fears for Arm.
