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Businesses The Almighty Buck Apple

Splitting Up With Apple is a Chipmaker's Nightmare (engadget.com) 98

Posted by msmash from the aftermath dept.
Apple is such a powerful company that, for third-party suppliers, it's hard not to become reliant on the cash that it pays you. Engadget adds: But when Apple says that it's done, choosing to move whatever technology you provide in house, the results can be really painful. Imagination Technologies is one such supplier, famously designing the iPhone's PowerVR graphics as well as pushing MIPS, a rival to ARM. But back in March, Imagination publicly announced that Apple was ditching it in favor of its own graphics silicon. Now, Imagination has revealed that it's going to take Apple to dispute resolution, maintaining that the iPhone maker used Imagination's IP without permission. It's the second chipmaker in recent months who believes Apple isn't playing fair, with Qualcomm counter-suing Apple in its own licensing dispute. Secondly, Imagination is going to have to sell off MIPS and Ensigma, two parts of its business that aren't as profitable as PowerVR. Gamers with long memories will remember that MIPS designed the CPUs that lurked inside the PlayStation, PS2 and Nintendo 64.
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Splitting Up With Apple is a Chipmaker's Nightmare More

Splitting Up With Apple is a Chipmaker's Nightmare

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  • Nightmare on 1 Infinite Loop Street (Score:3, Funny)

    by JoeyRox ( 2711699 ) on Thursday May 04, 2017 @11:22AM (#54354567)
    Timmy is back and this time he's angry.

  • One Imagines (Score:5, Insightful)

    by Luthair ( 847766 ) on Thursday May 04, 2017 @11:25AM (#54354599)
    Its pretty much impossible to build a modern GPU without infringing on the patents of one of the existing players. Even Intel is stuck paying licensing fees from AMD or nVidia, its hard to see how Apple won't have to do the same.

    • Re:One Imagines (Score:5, Interesting)

      by Anonymous Coward on Thursday May 04, 2017 @11:34AM (#54354663)

      Notably though, Imagination Tech's important patents have just expired. There's a reason that nVidia and AMD both suddenly implemented tile based renderers, and Apple suddenly decided they could viably produce their own GPU.

      • Nvidia and Tile Renderer (Score:4, Informative)

        by DrYak ( 748999 ) on Thursday May 04, 2017 @01:05PM (#54355351) Homepage

        There's a reason that nVidia and AMD both suddenly implemented tile based renderers,

        Actually, Nvidia has had their own TBR patents for quite some time :
        - Nvidia bought up 3DFx for their patents and their engineer back when that one went bankrupt.
        - Before that, 3DFx had bought up Gigapixel, among other for their TBR patents, to be used in future product (forgot the code name) - and HSR (hidden surface removal) tech to be applied much earlier in then current product (in the then VSA-100 / Voodoo4/5/6 and in the upcoming Rampage / Spectre)

        So Nvidia indirectly acquired TBR patents.
        Though for the record, they were more interested in the know-how and engineer which where working on the Rampage GPU ("3DFx Spectre" cards) due to programmable pixel shaders being all the rage, and retained them to work on GeForce FX (speculation backthen that probably the pun in the name was intended... )

        So in theory, they could have moved into the field much faster than ATI / AMD.
        (But back at the Rampage / GeForce FX era, there where some area were TBR was problamatic : e.g. some transparency (i.e.: simple alpha-blend, back then) couldn't be handled in a single pass easily. So probably they decided not to bother.
        Given that modern games work with tons of subsequent passes (transparent materials cause diffraction/distortion in a separate pass of a pixel-shader), I would suspect that it's not that much a problem anymore).

    • True and legally there are ways around this. For example, if Apple bases their GPU on ARM's Mali then they might be covered under ARM's licenses. The fine print would be whatever licensing deal ARM has with Apple and what patents ARM controls.
    • There is a large volume of GPU patents from the 90s that are (or will soon be) expired. 90s GPU hardware, with speed bumps and increased RAM, is actually quite competitive with top of the line patent-encumbered hardware from today. And -- important for mobile -- often has lower power demands. Meanwhile, You and Imagination are imagining that hardware __that doesn't even exist__ is infringing on their imaginary property. Smoke another bowl, homie, cause that's gotta be some good shit.

  • Unless they take the lid off Apples new graphics chip and can point out hardware design similarities and possibly extract the microcode. However doing so would violate apples copyright so they could counter sue.

    As usual, only the lawyers will win.

    • Re: (Score:1)

      by Anonymous Coward

      It's nothing the industry doesn't do already. Decapping chips, putting them under a microscope, and selling the high-res phots (And/or providing expert analysis) is a pretty brisk buisness and there are a lot of companies that specialize in doing just that.

      Really you'd be dumb not to peek at what your competitors are doing.

    • How does that violate copyright? I think you might want to look up copyright.

  • Going for a settlement with Apple? (Score:5, Interesting)

    by mykepredko ( 40154 ) on Thursday May 04, 2017 @11:37AM (#54354679) Homepage

    For Qualcomm and Imagination, I would think that their contracts with Apple were pretty iron-clad. Apple didn't become one of the biggest companies on the planet by signing deals that wasn't in their favour. Potential for abuse by Apple when the contracts were drawn up aside, I would think that the contracts are pretty solid and Apple knows exactly what it's rights are and has protected itself.

    This means that the only recourse for (former) suppliers is to go after Apple, primarily in the court of public opinion, to see if there's a chance for a settlement to avoid Apple's public reputation being damaged. Although after Jobs, I don't see how it could get any worse on that front.

    • I don't know the exact details of Imagination's IP claims. It might be a hail-mary/last gasp for them or there might be merit. Apple for their part seems to been on this track forever. It started when they bought out chip companies to design their own SoC and then CPU. GPU was the next step.

    • Re:Going for a settlement with Apple? (Score:4, Informative)

      by Anonymous Coward on Thursday May 04, 2017 @12:00PM (#54354837)

      I've had the misfortune of dealing with Apple on the business side, and they just make stuff up as they go along. They will make all manner of completely unreasonable demands, which have nothing at all to do with the contract, and just threaten to rip up said contract if they don't get what they want. Not to mention they will get a bug up their ass about enforcing one part of the contract one week, then the next week they couldn't care less about that, but this other minor inconsequential provision is now crucial, and they'll club you over the head with the threat of ripping up the contract if you don't comply. They'll claim they have "statistics" or some such that shows you aren't in line with other similar companies, but you'll never actually get to SEE the evidence, because it's confidential or some other nonsense. You'll be assigned an Apple minder, who will typically be completely unavailable if you try calling/emailing them, but will miraculously find time in their busy schedule if it's to call/email you about something you're not doing right. Some of their mid to upper level managers will even be verbally abusive if you have face to face meetings, and they'll even ambush you. They'll invite you to Cupertino, saying it's a friendly little junket to tour the Apple facilities, except you'll be ushered into a conference room where a number of execs will accuse you of a bunch of things.

      Essentially, Apple's M.O. is to just threaten to rip up your contract if you don't drop trou, bend over, and take a good ass pounding whenever they feel like giving you one. The little bits you see in stories like this don't even represent the tip of the iceberg, they're like the dusting of snow on the iceberg's surface.

    • For Qualcomm and Imagination, I would think that their contracts with Apple were pretty iron-clad. Apple didn't become one of the biggest companies on the planet by signing deals that wasn't in their favour. Potential for abuse by Apple when the contracts were drawn up aside, I would think that the contracts are pretty solid and Apple knows exactly what it's rights are and has protected itself.

      This means that the only recourse for (former) suppliers is to go after Apple, primarily in the court of public opinion, to see if there's a chance for a settlement to avoid Apple's public reputation being damaged. Although after Jobs, I don't see how it could get any worse on that front.

      Um, this is the company that ended up with its most important parts supplier becoming its biggest competitor. They are still trying to detach themselves from Samsung, and despite having $1/4 trillion in the bank cannot get hold of the best displays in the industry.

      Given that Mr Cook was in charge of all this supply chain stuff before being anointed by Jobs, why would you assume their other supply arrangements were put together any better?

      • Re: (Score:2)

        by Dog-Cow ( 21281 )

        At the time Samsung was chosen as a supplier, Android didn't even exist in the public sphere. The company hadn't been bought by Google, and no one could have predicted that someone would make it into a competitor and license it to handset manufacturers. So, if you consider not being able to predict the future a screwup, you must think you're Moses.

        • So, if you consider not being able to predict the future a screwup, you must think you're Moses.

          I used to work with Moses. Guy over-engineered everything. All this time I thought he was just being a little bit pendantic but now I see that he was just predicting the future.

          • I used to work with Moses. Guy over-engineered everything.

            Building a ship by making a wooden box is the opposite of over-engineering.

    • What is rumoured is that apple developed pretty much their whole graphics core, very different from imagination's, while the front end and some fixed functions are still imagination's IP. Either they are sure that by the time of implementation those will be developed IP free as well, or not encumbered by patetnts anymore.

      Of course engineers and lawyers are fallibe, and if Imagination surveys the graphics core with a fine enough comb, they may find some nuggets of their IP there. Or be a pebble in the shoe o

    • Both of these companies may have perfectly valid complaints, but even if they don't I could see them deciding to give it a shot anyway. Suing the deepest (non-governmental) pocket in the world has to be pretty high on any aggressive corporate attorney's bucket list, and it's probably pretty easy to convince the C suite that throwing a few million into legal fees is a good bet, since the odds of convincing Apple to settle just to shut down the negative PR are probably pretty good.

      And it makes even more sen

    • Re: (Score:2)

      by PCM2 ( 4486 )

      Apple didn't become one of the biggest companies on the planet by signing deals that wasn't in their favour. Potential for abuse by Apple when the contracts were drawn up aside, I would think that the contracts are pretty solid and Apple knows exactly what it's rights are and has protected itself.

      That assumption does not explain the multibillion-dollar lawsuits that have been going back and forth between Apple and Samsung, Apple and Qualcomm, all of the above companies and international regulatory agencies, etc. Nobody's really protected until a judge rules it so.

  • Typical (Score:3, Interesting)

    by Anonymous Coward on Thursday May 04, 2017 @11:39AM (#54354699)

    This is one of the oldest tricks in the business book.
    Get a vendor to supply OVER 35% of their entire business to you alone, then cut them off (or demand massive reductions in price) and when they falter because of the drop in revenue, you either purchase them outright for a song, or scoop up their IP when they go out of business due to Bankruptcy.

    Wal*Mart is famous for doing this, so was Sears back when they had non-insane management.
    I worked for a company that flat-out refused business from Sears if it exceeded more than 35% of their total income for this reason.
    Many years after I left them new management discarded that idea, and lo and behold within 5 years they went bankrupt when a customer demanded a 85% reduction in prices, then let them die and bought up their IP out of Bankruptcy Court for a song and moved all manufacturing to Guatemala.

    Imagination Technologies should have seen this coming.

    • Imagination Technologies should have seen this coming.

      What you're saying is that they lacked the Imagination to foresee their Technologies being taken away?

    • Re: (Score:1)

      by Anonymous Coward

      Their patents look to be expiring. There really isn't an IP to grab that isn't free for anyone to grab anymore. If you don't like this business practice, you better be for a more robust patent system with more protections for the inventor. Allowing your company to become so dependent on a single customer is simply bad management anyway. Let those companies die.

  • I've got a couple of Zgemma Linux-based satellite TV set-top boxes and they use a MIPS chip, so it's not just used in ancient game consoles. The boxes are very nice to tinker with (Web interface, ssh, loads of pre-built plugins) and I'll put in a good word for Wooshbuild - a firmware image that makes the box interface look like S*y HD or S*y Q.

  • and that would be... (Score:5, Insightful)

    by holophrastic ( 221104 ) on Thursday May 04, 2017 @11:44AM (#54354731)

    And that would be the reason my father told me never to let one client dedicate more than 30% of my business. It's also why I told my father that reliable clients sometimes get heavy discounts, to offset the lack of sales/collection efforts, which keeps them from rolling their own.

    • >And that would be the reason my father told me never to let one client dedicate more than 30% of my business.

      I have worked for companies that died because they failed to do this. One logistics and one IT.

      When one supplier dominates your business, they're not a supplier... they're your master. It's just a matter of how gentle they are. And as soon as they decide they can do better, they'll kill you off without a second thought.

      > It's also why I told my father that reliable clients sometimes get hea

    • Re: (Score:2)

      by fermion ( 181285 )
      This to me is the big issue. If you have a firm that is dependent on single client, it is not a healthy company. No one such expect such a firm to be around any longer than the client deems necessary. It is like kids who get out of high school and 'start from the bottom' at a corporation. Sure the potential to climb to CEO is there, but all too often if the corporation tanks, such a person is has no real transferable skills.

      That said, Apple probably worked with the company to get expertise in buildin

  • Maybe Tim Cook is not a sufficiently capable CEO.

    Steve Jobs's worst decision was promoting Tim Cook [qz.com] (Nov 2, 2016) "Quote: Why Tim Cook is the new Steve Ballmer".

    Remove Tim Cook as CEO of Apple. [change.org] (Oct 31, 2016) Quote: "Many products are announced in one quarter and released in another quarter."

  • MIPS was in game consoles, sure, but (Score:3)

    by Pezbian ( 1641885 ) on Thursday May 04, 2017 @12:08PM (#54354893)

    What about Silicon Graphics machines? I find it odd the article doesn't even mention SGI. I still have an O2 R12K, an Octane 2 R14K, and an Indigo 2 Impact R10K.

    • Re: (Score:2)

      by jedrek ( 79264 )

      Probably because Octanes and Indigos sold in the thousands and consoles in the tens or hundreds of millions.

    • Re: (Score:2)

      by jerk ( 38494 )

      This was my thought, when MIPS is mentioned, I automatically thing SGI. Then I realized that I'm old (not really) and that my memory is even longer than they assume their readers have. Of course, this is slashdot, so my expectation was that the user base that's left here (since I doubt they're adding to their user base) is as old or older than I am.

    • Re: (Score:2)

      by swb ( 14022 )

      My thought to, and of course that also makes for the link to OpenGL and 3D graphics, which IMHO was what SGI was often best known for.

    • The parent post mentions SGI iron.

      but also let's not forget multitude of routing equipment (CISCO was/is a big user of MIPS processors).

      Also, the Chinese have developed MIPS processors for use in anything from laptops to SuperComputers... (Loongson/Godson).

      MIPS cores are also used in many cheapo routers/modems

  • But when Apple says that it's done, choosing to move whatever technology you provide in house, the results can be really painful. ... It's the second chipmaker in recent months who believes Apple isn't playing fair

    Between Apple and these billion dollar companies Apple's business has created, my only reaction to this is... why is the taxpayer wasting money and resources on resolving these lawsuits? They should work out their differences in private mediation.

  • It's playing just for Imagination.

    Hopefully, as more of these patents expire, a Vulcan based open source GPU will emerge.

    • Hopefully, as more of these patents expire, a Vulcan based open source GPU will emerge.

      As the numerous past failures of attempts at opensource GPU or even opensource graphic cards have shown, making a functional and competitive graphic card is EXTREMELY difficult.

  • As always: Fuck Apple!

  • When you build your company based on income mainly from one giant customer, you are eventually going to lose.

  • famously to Vlassic Pickle. when you buy them these days it's a different company that bought the brand when it went under. The scam is you go to a company, give them a huge contract, they borrow a bunch of money to buy equipment to meet demand and then you leverage that by threatening to break the agreement. The bigger company might be breaking a contract but by the time that gets hashed out in court the smaller one is going to be bankrupt...

    • Yep. Worked at a company selling stuff to Apple. You had to prove you had the spare manufacturing capacity to deliver their highly custom chip to even compete. The losers who didn't win that spot on the board were left with a manufacturing floor that was half or more idle until at least the following year. A lot of their special requirements made the final chip totally un-sellable to anyone except Apple, and you often had to turn away business to keep that manufacturing capacity open.

      It was clear a few

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