Apple iPhone GPU designers Imagination axes 20 per cent of staff

PowerVR, MIPS wallahs must slash $40m in costs

Brit chip design house Imagination Technologies will shed a fifth of its workforce in a £27.5m ($40m) cost-cutting spree.

The Hertfordshire-based biz said on Thursday it will lay off about 200 people in addition to the 150 it said in February it would make redundant. That adds up to 350 or 20 per cent of its 1,700 headcount facing the chop this year.

Imagination was already trying to shave £15m from its spending by April 2017 – today it said it's slashing an extra £12.5m, meaning it will cut costs by £27.5m over the next 12 months. To put that in context, in the year to April 2015, the company raked in £177m ($256m) in revenue (up four per cent year-on-year) and made a £13m ($19m) net loss versus a slim £775,000 ($112,000) profit in 2014.

Last month, Imagination's long-serving CEO Hossein Yassaie quit, leaving non-exec director Andrew Heath in control as interim chief exec. The company's consumer electronics biz Pure is also up for sale, and its system-on-chip design wing will be "rescaled." It will also write-down assets and take some extra charges not exceeding a total of £5m ($7.2m), which will be paid from its cash reserves.

Imagination's business model is like ARM's in that it licenses its GPU and CPU core designs to chip makers, which in turn churn out components for product manufacturers.

Imagination's PowerVR graphics processor cores are used in Apple iPhones and iPads, Samsung smartphones and tablets, the handheld Sony Playstation Vita, and various system-on-chips that make their way into all sorts of things. The PowerVR family is where Imagination is particularly strong. Amid the layoffs, the biz said it is "actively seeking to fill over 50 roles in its PowerVR business as part of its program to further strengthen this business." As mobes and slab sales stall, Imagination is eying up opportunities to push its PowerVR blueprints into smart TVs, car dashboards, wearables, and similar tech.

The company also designs MIPS processors: it bought the rights to the technology in 2012 for £70m ($100m), and licenses 64-bit and 32-bit MIPS cores to chip manufacturers. The architecture and instruction set are pretty clean and simple, and have been used in spacecraft, the Sony PlayStation 1 and 2, the Nintendo 64, tons of networking gear, and so on.

Today, the architecture is under increasing pressure from the rival ARM architecture in the networking space; ARM also has MIPS crushed in the smartphone and tablet world and on the run in other areas of embedded engineering. MIPS continues to survive from the enormous momentum it had in the 1990s as a top-selling RISC platform.

Imagination insists its cost-cutting will not hit its teams working on PowerVR, MIPS and Ensigma, its communications chip designs:

These reductions will enable the group to reinforce and build on the current strengths in its core three businesses; graphics and multimedia (PowerVR), processing (MIPS) and connectivity (Ensigma). There are no planned reductions in these areas.

The company's share price was up 7.57 per cent to 184.75p at close of play in the UK. ®