Imagination Interim Results 2012/13

IMG today announced the 6-month interims (until 31.10.12):
Full statement is here:
http://www.imgtec.com/corporate/presentations/interim12/Half_Year_Results_Statement_12Dec2012.pdf


The overall tone was bullish, and I am sure this will be reflected in the analysts CC later this morning.
A number of things were striking about these results:

1. The royalty volume, at 237m was well ahead of most estimates and showed the strength/breadth of contribution outside of the big 2 (Apple and Mediatek) customers.
2. The asp worked out at 26cents/chip (blended) , due to the large Mediatek ramp, and the outlook for this is stable for the rest of the FY (due to increased contribution from higher asp chips). Some years ago, most would have expected much lower asp by the time IMG reached 500m chips/year.
3. Licensing was a concern for many but it worked out higher than many predicted. For the first time, IMG refer to 'subscription licenses' in the statement. Obviously that relates to the biggies such as Apple , Sony etc.
So lack of license rns is no longer an indicator of reduced licensing.
4. Opex was higher than predicted but this is a short-term effect of IMG sucessfully recruiting the required engineers for the scaling-up of the business. Opex growth will slow substantially in H2.
5. IMG chose to specifically address the Intel and TI issues (obviously with permission from those two companies) - the strength and depth of the relationships was emphasised. There is a difference between press perception and what actually happens behind the scenes.
6. Further high profile product launches are expected this FY from key OEMs in the mobile, tablet and STB/TV areas. ( I would expect news from LG and  ST in regard to TV/STB areas in early 2013.)
7. Design wins in the Chinese tablet market (white-box) was emphasised .
8. The all important figure of SoCs: now have 146 design wins, 69 of which are shipping/about to ship and 77 in-design (future royalties).

Well done IMG.

Financial highlights

• Group half-year revenue up 27% to £71.4m (2011: £56.3m)
  • Strong Technology performance maintained with revenues increased 34% to £57.3m (2011: £42.6m)
    • Royalty revenue jumps 66% to £39.1m (2011: £23.6m)
    • Another strong level of 1H licensing revenues of £17.8m (2011: £19.0m, 2010: £11.6m)
  • Pure revenue improved to £14.1m (2011: £13.7m)
    • Slightly improved UK retail but mixed international markets
• Adjusted pre-tax profit* up 10% to £16.8m (2011: £15.3m)
• Reported pre-tax profit of £10.5m (2011: £10.4m)
• Adjusted earnings per share* 5.4p (2011: 4.9p)
• Reported earnings per share 3.0p (2011: 3.0p)
• Cash balance of £54.5m (30 April 2012: £66.3m)
  • £12m investment in new building and £5m of strategic investments

* Adjusted results exclude non-recurring items, non-cash based share incentive charges and amortisation of intangible assets acquired from acquisitions. The reconciliation from reported results to adjusted results is set out in note 6.

Business highlights

Technology business

Royalties and chip/end-product design wins

• Partner chips shipped up more than 90% to 237m units (2011: 123m)
• Significant volume shipments and momentum in all mobile segments, tablet/personal computing, gaming, TV/STB & automotive
  • Including very strong share in lower-end handset and emerging markets growth
  • Average royalty rate reduced as expected with overall revenue effect very positive
• Strong growth in chip design wins with 146 active partner chips (2011: 125); 69 in production (2011: 54)
• Growing number of end-products across key OEMs in all regions including China
• Other high profile products from several key OEMs in the pipeline with a number close to launch
• First ray tracing solution targeting professional market launched and receiving very positive feedback from developers

Licensing

• Maintained good licensing activities across all of our IP including
  • Many new and extended agreements with existing partners including Allwinner, Greenplug, MediaTek, Realtek, Renesas, TI, Toumaz
  • Also a number of on-going long-term subscription licenses with certain key partners
  • Several new partners added including Entropic, Ineda and Socle
• 12 important agreements involving around 20 silicon IP core licenses
  • Addressing all our markets - mobile phone and tablets/mobile computing with both segments across high, mid and low-end categories, TV/STB, PMP/Camera, in-car navigation/dashboard, home connectivity and automation, digital radio and industrial/enterprise equipment
  • Including graphics, video, broadcast/connectivity and processor silicon IP cores, as well as V.VoIP technologies
• Continued active pipeline of prospects across all IP families

Pure business

• UK revenues marginally up and international revenues variable reflecting local markets
  • On-going DAB adoption worldwide and growing demand for connected audio
• Continued strategic development and pathfinding role
  • Focus on development of technologies for digital broadcast, connected devices and home cloud solutions
• Key recent new products launched to drive and complement Imagination key IP

Hossein Yassaie, Chief Executive, commented:

"An increasingly diverse range of product shipments, across our many partners and in all regions, have resulted in more than 90% growth in unit shipments to 237m for the first half – ahead of our target. On average around 1.5 million devices are now being shipped with our IP daily, despite the global economic environment.

"The Group is continuing to build on this momentum and with further significant chip and end-product level design wins anticipated we now expect the full year unit shipments to be close to the 500m unit mark. 

"Our 'smart' technologies continue to be adopted across new and existing partners, creating a solid base for continued momentum in future volume growth making our stated goal of around 1bn annual unit shipment by 2016 a realistic objective. 

"Despite depressed consumer spending, Pure continues to showcase effectively and help to drive strategic connectivity technologies as part of our overall plans. Whilst the tight economic environment is as expected impacting Pure's performance in the short-term, we anticipate seeing a financial improvement in this division over the medium term, driven by new product opportunities and international markets.

"We remain confident of our continued good progress given the growing demand across our IP families, the growth in design wins across a widening range of end user markets and the momentum in our partners' chip volume"

Imagination acquires MIPS

Imagination surprised pretty much everyone today by announcing a takeover of MIPS.  At the AGM HY and the management team were confident about taking on ARM in the CPU space, but all the signals were this would be via our existing META technology. It now transpires HY had MIPS in mind. It also explains how IMG will easily surpass 1 billion units/year in royalty volume sooner than otherwise expected . It is thought that several of IMG's partners will have supported the acquisition.

On the plus side, this 'adds weight' to IMG's CPU offerings, and expands the ecosystem significantly to include new and important players (eg. Broadcom) from the important digital home market. There also plenty of concerns however, not least the effect on the asp (MIPS chips go for about 5 cents each cf. with 31c for IMG) and the fact that it is loss-making.
Regardless of the many pros/cons, it is certainly testament to the ambition of HY for Imagination.

Imagination acquires operating business, certain patent properties and license rights to other patent properties of MIPS Technologies Inc., a leading provider of CPU architectures and cores, for US$60 million

Imagination Technologies Group plc (LSE:IMG, "Imagination"), a leading multimedia, communications and embedded processor technology company, has signed an agreement to acquire the operating business and certain patent properties, as well as license rights to all of the remaining patent properties, of MIPS Technologies, Inc. ("MIPS"), a leading provider of CPU (central processing unit) processor architectures and cores, for a cash consideration of US$60 million.
In addition to the operating business of MIPS, Imagination’s purchase includes ownership of 82 key patent properties (the “Retained Patent Properties”) that are directly relevant to the MIPS® architecture, and comprehensive license rights to all of the remaining 498 MIPS’ patent properties (the “Divested Patent Properties”). In a separate transaction, the Divested Patent Properties are being sold to Bridge Crossing LLC, by MIPS for US$350 million.

Strategic Highlights

• Strengthens Imagination’s presence in the substantial and growing CPU IP segment in both established and new markets
• Combines complementary CPU technologies, resources, expertise and market presence of Imagination and MIPS to deliver enhanced scale on several fronts
• The integrated business aims to create a new industry-leading force in CPU development and licensing
• MIPS is one of the small number of CPU architectures directly supported by the Android™ OS
• Imagination secures ownership or license rights to the entire MIPS portfolio of 580 patent properties

Transaction Highlights

• Imagination to retain certain key patent properties directly relevant to the MIPS architecture
• Royalty-free, perpetual license to be granted to Imagination in respect of the Divested Patent Properties
• Anticipated to be accretive to Imagination's earnings in FY2014 (excluding one-off items)
• To be financed from existing cash resources
• Expected to close in Q1 CY2013

MIPS Overview

• MIPS pioneered modern 32-bit and 64-bit RISC CPU architectures
• MIPS’ customers shipped over 700 million royalty earning units in its financial year ended 30 June 2012
• MIPS had 56 royalty-paying licensees in its financial year ended 30 June 2012
• MIPS CPU intellectual property core licensing business generated c.US$60.0 million in revenue in its financial year ended 30 June 2012
• MIPS has recently launched new performance and area efficient Aptiv™ Generation of cores

Hossein Yassaie, Chief Executive Officer, Imagination said:

"MIPS is the company that pioneered the RISC CPU architecture and created an iconic and widely respected technology. I am absolutely delighted to welcome MIPS and its team to the Imagination family.
"I believe that the combination of our existing Meta CPU technologies and activities with MIPS'; capabilities will help us to create a new force to be reckoned with in the CPU IP market. I am confident the acquisition will accelerate our growth in the substantial CPU IP market across many segments.
"We have been working closely with MIPS for several years now and have a number of mutual customers and partners. I believe that this transaction will be welcomed by both companies'; customers and the electronics industry at large."

Sandeep Vij, President and Chief Executive Officer, MIPS said:

"The synergy between Imagination and MIPS makes the proposed transaction a notable step forward, not only for the two companies, but for the whole electronics industry.
"It was key for us that our customers and partners were assured of a strong, long term future for MIPS' architecture, cores and other technologies, and thanks to this agreement we are confident we have found the ideal partner to take that forward.
"The industry needs semiconductor IP companies with a breadth of respected processor architectures for all SoC processing requirements. This acquisition is a strong and welcome step in addressing such needs."

Strategic opportunity

The acquisition will bring together two of the world's top five semiconductor design IP vendors delivering benefits to both companies' customers and partners as well as generating significant new business and revenue opportunities.

The acquisition will further strengthen Imagination's position and opportunities in mobile, TV/set-top-box, consumer, and other embedded markets, as well as increase its penetration into networking, infrastructure and other markets where MIPS has enjoyed significant success.

The acquisition of MIPS adds highly respected RISC-based 32-bit and 64-bit CPU applications processor architectures that complement Imagination's existing Meta 32-bit embedded CPU IP product family. The architectures have similar philosophies in several key areas including hardware multi-threading whilst also bringing highly complementary capabilities. The resulting combined CPU IP offering will become one of the industry's strongest and most comprehensive.

The acquisition also adds a well-established ecosystem of customers, developers, operating systems and tool providers, who will all benefit from the strengthened position and broader IP offering that the newly combined business has to offer.

Imagination strongly believes that the selection of each major IP block for SoCs is a key and complex strategic decision of its customers. Imagination customers have received and will continue to receive the fullest support possible when they use Imagination IP alongside CPUs, or other IP cores, developed internally or licensed from other suppliers. Any customer wishing to use Imagination's CPUs (including MIPS' CPU), GPUs (graphics processors), VPUs (video processors) or RPU (radio processors) with IP cores from sources other than Imagination will be fully supported by Imagination without compromise. This customer-centric and supportive IP business philosophy has always been central to Imagination's business model, is valued by Imagination's partners and has resulted in widespread market penetration.

MIPS

MIPS (www.mips.com) is a US technology company listed on NASDAQ and is a leading provider of industry-standard processor architectures and cores for home entertainment, networking, mobile and embedded applications. MIPS is headquartered in Sunnyvale, CA and has c.160 employees.

The MIPS architecture powers some of the world's most popular electronic products such as digital televisions, set-top boxes, Blu-ray players, broadband customer premises equipment (CPE), WiFi access points and routers, networking infrastructure and portable/mobile communications and entertainment products.

MIPS' major customers are global semiconductor companies and system original equipment manufacturers. MIPS' customers pay it license fees for the use of MIPS' architectural, product and intellectual property rights, as well as royalties based on processor unit shipments.

In the 12 months to 30 June 2012 MIPS had 56 royalty-paying licensees and MIPS' customers shipped over 700 million royalty earning units.

In the 12 months to 30 June 2012 the MIPS processor licensing business generated c.US$60.0 million in revenue and a loss before tax of c.US$9.0 million. MIPS' licensing business had gross assets* of c.US$20 million at 30 September 2012.

*Excluding cash and short term investments.

Funding and anticipated financial effects of the acquisition

The total consideration payable by Imagination is US$60 million in cash. The consideration will be financed from Imagination's existing cash resources.

Based on current business prospects, Imagination anticipates that the acquisition of MIPS will be marginally dilutive to earnings per share for the 2013 financial year, and accretive to earnings per share in 2014 (excluding one off items).

As part of the documents relating to the acquisition, MIPS has agreed to hold back approximately c.US$100 million in cash in respect of various ancillary transaction matters including a tax liability that is likely to arise as a result of the sale of the Divested Patent Properties and liabilities of MIPS relating to employee retention and severance payments.

Terms of the agreement and conditionality

Imagination and MIPS have entered into a definitive acquisition agreement under the terms of which Imagination intends to acquire the entire issued and to be issued share capital of MIPS. The agreement is subject to various conditions which are set out in the acquisition agreement. The acquisition is conditional, amongst other things, upon completion of the acquisition of the Patent Portfolio by Bridge Crossing LLC and applicable regulatory approvals as well as approval of the transaction being obtained from MIPS' shareholders.

Patent Portfolio sale

MIPS has also entered into a definitive acquisition agreement with Bridge Crossing LLC, whereby Bridge Crossing LLC is to acquire 498 out of 580 of MIPS' patent properties for US$350 million in cash in a separate transaction that will complete before Imagination's proposed acquisition of MIPS completes. The sale of the Divested Patent Properties is also conditional on MIPS' shareholders approving such sale but it is not conditional on Imagination completing the acquisition of MIPS.

Expected Timetable

If the conditions to which the acquisition of MIPS is subject (including the approval of MIPS' shareholders) are satisfied, then the transaction

Apple Q4

Apple released another record set of results last night for Q4;

http://seekingalpha.com/article/952971-apple-s-ceo-discusses-f4q12-results-earnings-call-transcript

Approx 45m iOS devices were sold:

iPhone 26.9m
iPad 14m
iPod Touch approx 3.5m
Apple TV 1.3m

This follows from approx. 48m iOS devices in Q3, giving a total for April-September of approx. 93m iOS devices. The IMG H1 period is May-October, and a royalty is counted from when the SoC ships (rather than when the OEM product is sold), so taking into account the iPhone 5 launch and other recent high profile announcements, we must be looking at >100m volume from Apple alone in IMG's H1 period.
Add to that the Mediatek ramp and other high shipping products (eg. Bezos revealed Amazon Kindle Fire HD is the no.1 global product on amazon.com) then the H1 royalty volume must be well north of 170m imo (vs. 126m for H1 2011/12). Many are now, justifiably, expecting the 500m barrier to be smashed for FY.

Apple unveils 4th Gen iPad and iPad Mini

Apple unveiled 2 more products yesterday utilising IMG graphics and video.
There was the expected iPad Mini, sporting an A5 chip (Power VR SGX 543MP2) but also a 4th Generation iPad (which no-one expected), featuring a new A6X chip said to be twice as fast (dual core CPU) and twice the graphics performance (quad core , identity not yet confirmed but probably SGX 543MP4 clocked higher) of A5X .

Specs:
http://www.apple.com/ipad/specs/

http://www.apple.com/ipad-mini/specs/

With these 2 products, together with iPhone 5, new Amazon Kindles, and continued Mediatek ramp-up, IMG are going to be off to a flyer (volume-wise) in H2.

H1 2012 Mobile GPU Shipments - Imagination still top of pile

JPR has released his estimates for GPU shipments in H1 2012 for mobile devices (ie. tablets and smartphones).
ARM were expected to increase, courtesy of Samsung (Galaxy III etc) and also Chinese tablet market, but Vivante have also done very well. Qualcomm market share drops more than most were expecting, whilst Imagination remains fairly steady. Nvidia's share remains very low despite all the hot air.
All of this is within a growing market overall.
H2 will be interesting, with the rapid acceleration of Mediatek (all IMG) and iPhone 5 release (plus new IMG'd Amazon tablets and iPad Mini) having an impact. I'd also expect Qualcomm to take back some market share from ARM/Vivante.

TIBURON, CALIF. — Jon Peddie Research (JPR), the industry’s research and consulting firm for graphics and multimedia, announced estimated mobile devices graphics chip shipments for the first half of 2012. Mobile devices include smartphones, tablets, and game consoles.

The market for portable devices (mobile devices that we can carry) continues to soar in spite of economic difficulties and general uncertainty. Although portable devices are not necessarily replacing the PC, they are outselling the PC. All of these devices have a graphics processor (GPU) integrated in the device’s system on a chip (SoC) application processor.

The application processors are made by a dozen-plus semiconductor suppliers (Broadcom, Apple, Intel, Marvell, MediaTek, Nvidia, ST-Ericsson, Texas Instruments, Toshiba, Qualcomm, Samsung, etc.). All of those companies fall into one of two categories: vertically integrated or IP buyers. Nvidia and Qualcomm are the vertically integrated companies with their own GPU designs; all of the other companies buy GPU IP from one of four IP suppliers (ARM, DMP, Imagination Technologies, or Vivante). The exceptions to this tidy categorization are Samsung, which has an internal GPU design and buys IP from ARM and Imagination Technologies, and Broadcom, which has an internal design GPU and buys IP from ARM.

The leading high-volume suppliers of application processors (i.e., SoCs) are Apple, Texas Instruments, Qualcomm, and Samsung. ARM supplies GPU IP for some of Samsung’s mobile phones, while Imagination Technologies’ GPU IP is used in Apple, Texas Instruments, and some of Samsung’s mobile phones and tablets.

The upcoming SoC suppliers with impressive design wins to their credit are Intel (Imagination Technologies’ GPU) and Nvidia (proprietary GPU).

Other SoC suppliers that buy GPU IP are Freescale, Huawei, MediaTek, Rockchip, and Wonder Media/VIA. These companies have participated in the feature phone market, and some of them have recently entered the smartphone and tablet segment.

One area that is fueling the growth of portable SoCs is the exploding tablet market in China, which is contributing significantly to the astounding growth that ARM and Vivante are experiencing. As a result of this tablet surge in China, dramatic changes are expected during the next 12 months. Apple will introduce a 7-inch tablet, Microsoft will bring out its Surface tablet, and Texas Instruments will continue to supply Amazon (even though the company is pulling back from the smartphone market as Nokia loses market share).

The market for SoCs with GPUs grew 91.3% from the first half of 2011, with market shifts occurring as shown in Table 1 below.

Supplier		1H'12		1H'11
Qualcomm		26.4%		36.4%
Nvidia		2.5%		3.5%
ZiiLabs		0.1%		0.2%
ARM IP		12.9%		6.2%
DMP IP		1.7%		2.2%
Imagination Technologies IP		46.5%		49.1%
Vivante IP		9.8%		2.5%
TOTAL		100.0%		100.0%
Table 1: Market share changes for portable devices from 1H’11 to 1H’12

As a result of the turbulence in the market, we expect market shares to shift dramatically through 2012, and we look for a new IP company to enter the market in 2013.

END

Read more here: http://www.heraldonline.com/2012/10/19/4350464/imagination-technologies-still.html#storylink=cpy

More from AGM

Another excellent AGM , with wonderful hosting by Susi Barrett (communications director) and her team. Great to catch up and get insight from fellow Imagineers like Dave Sweenoid, Roninja, Ken Hammerd ( superb liveblogging BTW), Blueflame, Brooky, Newtona, Goodgrief, Gez, Rog and co.
Hossein and the top management were quietly confident and assured , leaving attendees in no doubt that IMG are firing on all cylinders but have no intention of resting on their laurels.
I will just add a few bits which came from discussion with management.

Firstly it is worth reiterating that things are just fine with Intel. We'll be in the smartphone solutions whilst the Intel in-house graphics will take the PC/laptop slots - in between that (ie. tablets etc) there will be a mixture of the two.
Regarding the DTV market a couple of new things. Firstly, we will soon see the first results of the MStar SGX 5XT deal from last year, indeed certain large TV companies are specifying the IMG Graphics core instead of the Mali-based MStar cores. Won't be too long before the IMG'd Mediatek DTV cores are also shipping. Due to IMG's excellent relationship with both Mediatek and MStar, the merger is not a concern.
The Mediatek/MStar merger has also meant increased  '2nd supplier business' for global DTV no.2 and IMG partner Sigma Designs. Smaller but important suppliers like SiS Inc.are also starting to ship IMG-based smart TV cores
Sony are also utilising SGX 5-XT cores in their nex-gen DTVs.
Add all of this together and the inevitable conclusion is that IMG will be a dominant graphics force in DTV/SmartTV soon enough. STBs are also a huge target market for IMG.

TKS was delighted about the specific mention of PowerVR graphics by Amazon/Jeff Bezos in the new Kindle Fire HD adverts (see recent post). IMG have a good relationship with Amazon.
I was happy to hear things are going well with LG (currently use Qcom mainly), I'm expecting good things from that partnership.
IMG are anticipating >50% market share in the upcoming Windows 8 (smartphones/tablets) market via their key partners eg. TI, Intel, STE, Samsung.

Post AGM round up

Some things to sum up.

1 Ensigma Tier 1 licensee shipping in volume within 2-3 months
2. Caustic Pro add in card in same time frame. Licensing later but current version only uses CPU and still kicks competition's arse. If coupled with a Rogue SoC then performance multiplies.
3 Ray tracing on chip needs 2 more generations of process reduction to be a goer but licensing soon
4 Rogue kicks arse. Silicon running OpenGL ES 3 was dazzling.
5. Caustic Pro card ditto - and how much better than current offerings at a fraction of the price is staggering.

Forgotten half a dozen other nuggets but will get back ASAP.

Wonderful hooking up with crew new and old all day.

Tony King Smith

Has got his lucky AGM tie on again - that man needs a pay rise !

And the formal bit is over - head for the hills, lock up your daughters, etc

Also from Dr D

John Metcalfe (unsung hero) plays a pivotal role in goal setting and targets for divisions and new acquisitions ensuring the culture club thing to allow expansion/scaling being demanded by licensees

Dr D

Is of the opinion that the lowering ASP is more due to Ensigma shipments than Mediatek.

We will find out more on Ensigma licensee during drinks and nibbles hopefully

For completeness

No divvie mentioned a dividend, nose gays to repel the stench were not required as all attendees appear fragrant at the moment.

All resolutions - miraculously - being passed. Bizarrely 4m voted against re-appointing HY ! Hang your heads in shame you twunts.

Rogue is the D's B's

 And will still be the best out there. And indeed SGX MP is better than the competition "wait til you see the benchmarks of some of the recent devices" - presumably this must be a reference to A6.

Doesn't see intel in-house to be a problem as we will 'always be in phones', Intel will always be in PC, the middle ground will sometimes be us, sometimes be in-house.

So not concerned with the relationship or the future now they are finally going to be getting up to e volumes that should be expected.

Sweenoid's Touchy feely Question

Relationship with all top customers still wonderful, plus all US, Chinese and LG,  HiSilicon relationships are very strong. Still says he hopes Samsung to be a whole customer again at some point.

Future tech - camera seems to be important, CPU market is also 'in play'

'Hossein, you have to scale up with us'. Say customers who have grown massively.

HY developed the 'Culture Club' - hopefully he doesn't really want to hurt us- where all roadmaps are discussed weekly and allow us to grow - quickly - without losing the corporate or cultural identity. 

HY sees Qualcomm as the main competition, NVIDIA a busted flush, Mali is at a different level of penetration (lower) and lower tech than Qualcomm (which I think is odd considering the various published roadmaps).

Site

Expect capex on new buildings to be 15m per year for the next couple of years, plus the reason for the purchase was to ensure we couldn't get turfed out by an arse pain landlord.

Very upbeat

From the Boss, very animated and confident about the future prospects. If last year was the most excited we'd seen him, this year was on a par.

I am fairly sure he let slip we will be moving 1bn units by 2015 !!!!! He will definitely backtrack on that later over drinks but it's what he said folks...

Now for the dullsville numbers

I'm following your posts intently. I assume those figures for graphics/comms are industry wide ?

Keep it comin !

TVs

Sees a massive future for 4k TV. he's obviously been privy to some industry bigwigs

Again repeats idea we will become more of a processor company in future.

hmm 2

Sees '1 bn shipments of graphics per year in 2yrs or so, then multi billion a few years after that'

2-3 yrs time 100-150m units of comms IP per year

At higher end of chip market royalties are going up, at lowered going down.

He joked that last year analysts moaned we weren't in low end handsets, this year they Moab because ASP is slightly down as we're in low end handsets

'Orange'

Listed under technology partnerships.

EE have LTE rights here, and we know Hellosoft has been licensed to a carrier.

hammerd2 is calling this as the Hellosoft license

Hmm

I know we've never made much cash out of it but I get the feeling HY's not really bothered about the display IP anymore.

Expect licensing of ray tracing IP end of next year.

Expects Meta CPU market to be very important "expect lots of announcements in this area"

More emphasis on Flow - monitoring, management, healthcare devices. Sees Flow as entirely complimentary to everything else.

Next few months for Caustic add in cards - working with major PC companies.

Auto

Unbelievably the cost of the electronics in a new car is up to 2 x cost of the engine. 

Not a lot of people know that. Now blow the bloody doors off.

He's injured

Just seconds after coming off the bench HY announces he's pulled a neck muscle so his customary wink wink shrug shoulders technique for hint making later will be in serious danger

Kick off slightly delayed

to allow the masses to squeeze in to the hall.

Format of the day will be as per usual (dull, boring, interesting, sleepy, mind numbing, drunken, fabulous).

We're about to go with GS going over the running order.

HY's on the bench, looking confident and ready to rock. Ian Pearson as sanguine as ever, the others looking calm. The pressure obviously not got to them yet, but we'll see how the FD goes after some recent collywobbles.

HY's up

AGM Day est arrivée !

The gathering of the Clans has commenced ! Currently in attendance myself, sweenoid, prim, Ronak, brooky, Blueflame, Pete Frost.

Loins are being girded ready for action.

Testing testing. Pre AGM blog testing.

If this has worked stay tuned for AGM notes tomorrow, if not then blah blah blah

Interim Management Statement

After the annual excitement of the new iPhone event last night, Imagination announced a solid IMS this morning:

Imagination Technologies Group plc ('Imagination', LSE: IMG), a leading multimedia, communications and embedded processor technology company, is today issuing its Interim Management Statement for the period from 1 May 2012 to 12 September 2012.

Trading update
Following the strong performance in the last financial year, the momentum in the business has continued.

Our partners’ product launches in the second half of the last financial year, together with shipments starting for a number of customers for the first time this year, have both contributed to strong growth in unit shipment volumes. The volume growth has been driven across the expected key segments, including: mobile phone, computing/tablets, mobile multimedia/gaming and home consumer. The royalty revenue growth has continued to be strong, in line with expectations. As expected, the strong unit volume growth has steadily extended to the lower-end of the smart phone market resulting in a small downward movement in the average royalty rate.

Licensing activity remains steady but is subject to the usual uncertainty over timing, particularly given the continuing macro-economic volatility.

Pure continues to see steady growth in its international markets and small improvement in its UK business, although the tight economic environment remains a factor. Strategic product developments have been on-going in the year with several key product launches planned for the run-up to Christmas.

We continue to invest in key areas of technology both organically and through targeted acquisition activity. As part of the latter, in June we made a small acquisition of the IP, assets and employees of Nethra Imaging Inc. (Gross Assets £0.4m at end June), which further enhances our capability in the area of camera/video IP.

Technology update
PowerVR GPUs – The PowerVR graphics processor (GPU) family continues to lead the market in technological capability, roadmap strength and ecosystem and remains by far the most adopted and shipped technology of its kind. Many designs across PowerVR Series5 and 5XT and the new generation Series6 family are at different stages of delivery with increasing numbers of Series5XT-based devices entering production and contributing to volume ramp-up. The Series6 IP core family expanded to four members, with others in the pipeline. Several partner prototype devices using Series6 are now at first silicon and are functioning well, with software driver and applications development significantly advanced. The development of Caustic’s complementary ray tracing technology is on track and will, in due course, further strengthen our graphics offering and add to our competitive position.

PowerVR VPUs – Our PowerVR video decode and encode processor (VPU) families, which support the latest and emerging formats, continue to see strong volume growth. We are seeing a growing industry trend in favour of licensing rather than internal development, particularly as the next generation of advanced video standards are coming to market. In keeping with our strategy of providing leading-edge and market-driving technologies to our customers we recently launched the new PowerVR Series4 video processors offering increased performance and precision as well as supporting the emerging ultra HD resolution displays of 4Kx2K pixels. These technologies are seen as essential for future generations of smart TV products which require very high quality and/or the capability to display full HD at the same time as related information such as social network interactive pages.

Ensigma RPUs – Our Ensigma programmable radio processing unit (RPU) family supporting both multi-standard broadcast receivers and Wi-Fi/BT connectivity is becoming increasingly relevant to mainstream markets and has been designed into a growing number of chips and products. Ensigma RPUs support worldwide TV and radio reception as well as important connectivity standards such as Wi-Fi, all running on the same silicon engine in software. This technology is increasingly essential for delivery of cloud and broadcast content to home and also within the enterprise. Already we have partner devices in volume shipment using this technology for digital radio and Wi-Fi connectivity and we expect several new partner devices targeting multi-standard/global TV markets to begin shipment during the current financial year.

Meta CPUs – the Meta family of embedded processors offers state-of-the-art general-processing combined with multi-threading, demanding real-time and signal-processing capabilities. These capabilities are ideal for highly integrated, feature-rich and cost effective systems. Many of our IP cores integrate Meta processing cores already. Over 50% of the total annual volumes of our IP shipments deploy Meta technology and we expect this trend to continue upwards. The growth of open source operating systems such as Android and other Linux implementations, the trend towards heterogeneous systems/standards, and the inevitable growth of internet connectivity across the majority of devices, will further drive deployment of Meta processors in applications in embedded systems and processors in a variety of markets.

HelloSoft V.VoIP - our HelloSoft family of video and voice over IP (V.VoIP) products, including platform agnostic SDKs, continues to get stronger and more comprehensive, resulting in a number of important engagements for these technologies with both operators and mobile phone OEMs. This is in part driven by the arrival of 4G/Long Term Evolution (LTE) networks which require VoIP over LTE (VoLTE) an area where HelloSoft products are uniquely strong. HelloSoft V.VoIP technology has now been adopted by a number of key network operators for both enterprise and consumer segments with a number of handset design-wins also secured.

Caustic Professional – Technology development and initial customer delivery are making good progress with the first ray-tracing test chip demonstrated and positively received at SIGGRAPH in August 2012.

Pure update
Despite the current slow-down in consumer spending, Pure continues to effectively showcase and help to drive key strategic connectivity technologies. We expect to see a financial improvement in this division over the medium term, driven by international markets and new product opportunities.

Outlook
The continuing macro-economic volatility creates caution among our customers. Despite this the licensing pipeline remains robust, although there is the usual uncertainty over the timing of deal closures.

We expect further product launches from our customers, including a number of our significant design wins reaching production, which will continue to drive strong growth in royalty volumes and revenue.

As a result the Board remains confident that the Group is on track for continued progress.

Hossein Yassaie, Imagination’s Chief Executive said:
"Our ‘smart’ technologies are being adopted more widely across both new and existing partners, creating a wider base for continued momentum in future volume growth which maintains our stated goal of around 1bn annual unit shipments by 2016 as a realistic objective."

END

At this stage it is not clear whether the iPhone 5 contains SGX 543MP2 or MP4, but Apple are stating 2x graphics improvement over iPhone 4S. The new iPod Touch was also announced and contains an A5 chip (SGX 543MP2) . 

The IMS shows progress across all the important divisions with strong royalty volume & revenue growth a key feature. There is a small reduction in ASP due to the royalty mix - in my view this is mainly due to the strong Mediatek ramp at present.

AGM is tomorrow (many of us will be there) so we hope to  be 'liveblogging '.

KINDLE FIRE HD UNVEILED, BIG WIN FOR OMAP

Yesterday evening Jeff Bezos (Amazon Inc CEO) unveiled the new line of Kindle Fire HD tablets:

http://reviews.cnet.com/kindle-fire-hd/

The analysts (and tech sites)  had talked themselves into believing Tegra 3 had this 'in the bag'. Instead, Bezos revealed the 8.9" versions had OMAP 4470 (with Power VR SGX 544MP) inside. The 7" version is thought to use the OMAP 4460 (Power VR SGX 540). Bezos went out of way to state the advantages of OMAP 4470 over Tegra 3, it's even in the product description on www.amazon.com:

'A rich HD display requires a powerful processor to drive it. The TI OMAP4470 processor in the Kindle Fire HD 8.9" has 40% more memory bandwidth than Tegra 3, enabling faster web browser JavaScript performance. And Kindle Fire HD 8.9" has an Imagination SGX544 3D graphics core that can process over 12 billion floating-point operations per second, so even graphically intensive games run smoothly and render stunning scenery. We also tuned the graphics pipeline and touch handling software to eliminate delays between when you touch the screen and when the application responds. This means the home screen scrolls more smoothly, videos start playing faster, and games respond nearly instantaneously.'

This comes as welcome relief for the OMAP divison (one of IMG's oldest and most trusted partners), which has had tough times of late, with intense competition from Qualcomm, Samsung LSI, Broadcom and Mediatek of course.
It's also a great win for IMG and helps maintain the very high market share for tablets. Next week we have the Apple iPhone 5 announcement (12th), followed 2 days later by the AGM in Kings Langley. The IMS will also be out quite soon,should be pretty upbeat with all this great news.

Mediatek update

There have been a few developments over at key IMG partner Mediatek which are noteworthy:

Firstly, a few weeks ago MTK announced it was raising its full-year forecast for smartphone chip shipments to 95m units (from 75m units). Shipments in the current quarter are now expected to be approx. 30m (21m in last quarter). This is due to increased demand from China for MT6575 and MT6577 (both IMG'd).
This has an immediate positive impact on IMG's H1, and I would not be surprised to see the total H1 IMG royalty volume in the region of 200m chips.

http://www.taipeitimes.com/News/biz/archives/2012/08/01/2003539124

Secondly, the Mediatek mobile chipset roadmap has been leaked and reveals 2 new cores both featuring the PowerVR SGX544. Full details here:

http://www.gizmochina.com/2012/07/26/mediatek-quad-core-chipset-roadmap-leaked-out-on-the-net/

Finally ,it was good to see MTK break into the top 5 for apps processor vendors, no surprise there:

http://www.eetimes.com/electronics-news/4391817/MediaTek-cracks-top-5-in-smartphone-apps-CPU-sales

Apple Q3

Apple announced Q3 last night:

http://seekingalpha.com/article/745271-apple-s-ceo-discusses-f3q12-results-earnings-call-transcript?part=single

For IMG, the relevant numbers are:
iPhone 26m sold
iPad 17m sold
iPod Touch - approx 3.5-4m sold
Apple TV 1.3m sold

Giving a total in region of 48m IMG'd devices for the quarter. The comparable figure this time last year was 33m, so pretty healthy advance there for IMG.
Last year, the volume figure for iOS devices in Apple's Q4 was little changed from Q3, due to October release of iPhone 4S, so there is little to suggest things will be different this time round unless there is an earlier release of iPhone 5 (or other rumoured devices). IMG's H2 will be huge due to iPhone 5 roll-out and anything else Apple have up their sleeve.
The big difference this time for IMG's H1 though is the Mediatek ramp, at 15-20m per quarter. There is also greater breadth of new SoCs being released (eg. SiS, Sigma, Realtek) in H1.