Apple's announcement to ditch the graphics chips designed by Imagination Technologies (IMG) and the subsequent share price collapse that followed could leave the door open for the U.S. giant to acquire the British firm, investment bank Jefferies said in a note on Tuesday.
Imagination Technologies design graphics processing units (GPU), which are key components in Apple products allowing high-quality images on its retina displays. Apple on Monday said that it's developing its own "independent graphics design" and will be "reducing its future reliance on Imagination's technology" over the next 15 to 24 months.
Shares of the U.K. company plunged on Monday closing at £1.03 ($1.28), down from Friday's close of £2.68. Apple is Imagination's largest customer. Investec said in a note on Monday that it had expected Apple to account for around 50 to 60 percent of the group's sales this year.
One theory about why Apple made the move is that it eventually wants to acquire Imagination for its key PowerVR GPU.