Imagination Technologies (Other OTC: IGNMF - news) , the British microchip designer whose technology powers graphics in Apple’s iPhone, has attempted to draw a line under a difficult period for the company by reporting strong demand for new products.
Chief executive Sir Hossein Yassaie said the company was “on track” following a profit warning in May.
Shares fell to a three-year low in August, two-thirds off last March, as investors feared a slowdown in smartphone sales growth and fretted that the company would lose market share.
However, Imagination has rebounded following last week’s launch of the iPhone 5S believed to include its technology as well as a new deal with Taiwanese chip manufacturer MediaTek.
On Tuesday, Imagination said it had seen “strong” growth in royalty revenues the fees it charges manufacturers per chip produced and said new business had also picked up.
Licensing revenue fees from signing new deals and a crucial indicator of future royalties are forecast to be between £30m and £35m this year. Last year they declined by 15pc to £29.1m.
“Overall the progress is very much on track,” Sir Hossein said. “It’s steady as she goes, there have been significant developments in the recent period.”
He dismissed concerns that Imagination’s dominance in graphics chips for smartphones the company powers devices including the iPhone and the Samsung Galaxy S4 was under threat from well-heeled competitors such as ARM Holdings (LSE: ARM.L - news) , which is making strides in the space. “We are comfortable that we have got coverage of the market, we are a market leader,” Sir Hossein said.
He added that the company was integrating well with MIPS, the US chip designer it bought last year, and that MIPS was well placed to take advantage of the opportunity to design chips for “wearable technology” such as Google’s internet-connected glasses and Samsung’s Galaxy Gear smartwatch. “It’s a completely new segment of the market but we are already in a number of designs,” Sir Hossein said.
Shares fell 2.7pc to 334.7p in a bout of profit taking after a recent strong run.