Imagination wrote a cheque for $100 million to buy MIPS after a battle with US group Ceva for control of technology group. The move is interesting because Imagination wants to add MIPS's central processing technology to help compete with ARM. Shareholders are worried that Imagination might have overpaid for the technology. Ceva, which had twice raised its own bid, said another increase would not meet its financial objectives.
At the moment MIPS is not worth much. It is a loss making business and shareholders can’t work out why Imagination was so keen. Eoin Lambe at Liberum Capital said Imagination would have to borrow some $22m to help fund the deal but he said it made strategic sense. He admitted that Imagination faces an uphill task in making MIPS' CPU architecture relevant one again, in an increasingly Arm dominated world.
But what many of the shareholders do not know, is that the Chinese government’s own chip plans are entirely focused on MIPS. The Chinese government is flat out getting its chip development schemes off the ground. This will enable cheap chips to flood the Chinese market. This will give MIPS, and therefore Imagination, a strong base to fight against ARM. However it will also give it a market which is strong enough in its own right.
Wednesday, 19 December 2012 10:41
Imagination’s MIPS move costs it with shareholders
Written by Nick Farrell
But deal could pay off
British company Imagination appears to have angered its shareholders by pushing through a deal to buy MIPS.
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