Imagination Technologies (IGNMF) shares lost more £500 million ($625 million) in market value in London Monday after Apple (AAPL) - Get Report , its biggest customer, said it will stop using the chip maker's intellectual property starting next year.
The British chip designer said that it has been informed by Apple that it will no longer use its intellectual property in new products in 15 months to two years time and that it will be no longer eligible for royalty payments under the current agreement, which the group described as "essential to its business". Apple uses Imagination's graphic processor units it its iPhones, iPads, iPods, Apple TV and the Apple Watch.
Imagination shares plunged 165 pence, or 61.5% to change hands at 103.5 pence each, the lowest since June 2009, taking the company's market capitalization to £290 million from £765 million at the close of trading Friday.
"Apple has asserted that it has been working on a separate, independent graphics design in order to control its products and will be reducing its future reliance on Imagination's technology," Imagination said in a statement, adding that this could violate Imagination's patents, intellectual property and confidential information.
"Further, Imagination believes that it would be extremely challenging to design a brand new GPU architecture from basics without infringing its intellectual property rights, accordingly Imagination does not accept Apple's assertions," the company added.
Imagination is now in discussions with Apple on potential alternative commercial arrangements for the current license and royalty agreement.