The Morning Badger (4/3/17): What Happens When Apple Stops Buying from a Company?

Apple Tim Cook

Apple Does What Apple Wants: Earlier this morning, Imagination Tech announced they would no longer design graphics cards for Apple’s iPad, iPhone, and Watch products. Imagination believes the company will design their own in-house cards, which would likely decrease costs and increase device efficiency.

Unfortunately, Imagination Tech makes a sizable amount of their money by selling their graphics chip blueprints to Apple. Without Apple as a client anymore, Imagination Tech will be without millions in revenue. Shareholders in the company panicked upon hearing the news, and $IMG.L is now down over 61% this morning on the London Stock Exchange. Imagination has provided the company with graphics card designs since the original iPod, and losing their biggest customer will undoubtedly continue to hurt the 32-year-old-company.

Apple, however, could potentially save money in the long term by not paying an outside company for graphics card designs. The company’s stock is only up by a fraction of a percent this morning, but if they design their graphics cards and other internal iDevice components, they could stand to save billions. At the same time, this would also potentially put many companies reliant on the company’s purchases out of business or in a lurch.

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