Apple buys more Imagination

Apple has purchased an additional 2.2 million shares of stock in Imagination, the British-owned Bangalore chip maker, increasing speculation that Apple will become more involved in chip design.

Adding to its recent purchase in the Bangalore company, Apple is now up to an investment level of 9.5 percent. The 2.2 million shares cost the Cupertino electronics giant just over 5 million U.S. dollars. Apple had previously purchased a smaller share in the chipmaker. In December of 2008, they purchased a 3.6 percent share of Imagination at a much lower share cost.

There have been a number of rumors recently about Apple wanting a stake in the chip design and production business, according to a WSJ story. First, Apple purchased the chip design company AP. Then, their initial stake in Imagination seemed to point that direction. At the same time, Apple became a licensee of proprietary design technology for ARM processors. Apple has also been hiring new employees with processor design and management backgrounds and experience, especially in the NEON instruction set used by ARM processors.

This latest purchase in a chip-making company would just seem to cement Apple’s interest in such technology. The most likely place for them to use the sort of chip upon which they are focusing is in the iPhone and iPod Touch lines. The next most likely is more interesting, though: the rumored new Apple tablet computers, which would need some serious juice in the thin, thin form factor of the iPhone. Many industry observers say that the reason for the delay in the tablet is that it takes a very long time to develop an ARM chip, and that that is exactly what Apple is doing.

All of this is made more interesting by the fact that Intel has also been buying a stake in Imagination, but an even larger one. At last assessment, Intel had purchased 14 percent of the Bangalore chipmaker, about half again more than Apple. It is hard to tell if this is becoming a bidding war or a budding joint venture.

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