December 14, 2010 4:34 am

Imagination to license chips to telecoms

Imagination Technologies will start licensing its chip designs directly to telecoms groups for the first time as it seeks to take advantage of the rapid shift towards video and voice telephony services on the internet.

Hossein Yassaie, chief executive, said that phone carriers and handset operators were increasingly looking to offer their own homegrown versions of video and voice over internet protocol (VoIP) services as an alternative to market leader Skype.

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“The whole world is going to VoIP and there will be a variety of ways that people get media over the internet. Skype will be one but there will be others,” he said.

The vast majority of Imagination’s chip designs are licensed to semiconductor companies such as Intel and Samsung. By licensing its designs directly to telecoms groups rather than through a chip manufacturer, Imagination aims to widen its customer base.

Phone operators were initially resistant to allowing customers to make calls using internet telephony services offered by companies such as Skype because they thought the free or lower-cost calls would cannibalise revenues. However, as voice and web services have increasingly converged, operators are now pursuing their own VoIP strategies.

A number of telecoms groups have signed deals to allow customers to use video and VoIP services offered by Skype, which last year became the leading carrier of international calls and is expected to list on Nasdaq next year.

However, telecoms and technology groups are looking to compete with Skype. Google recently unveiled a service that will allow Gmail users to call landlines and mobiles from their inbox.

Imagination, whose graphics chip designs are used in Apple’s iPad, last month acquired US-based HelloSoft for up to $47m (£30m) to assist its push into video and VoIP as well as expand its WiFi offering.

HelloSoft’s technology will help Imagination offer chip designs that will improve the speed with which video, audio, voice and graphics can be delivered to internet-connected devices.

Mr Yassaie said that over the next few years high performance connectivity would become increasingly important to people using tablets, smartphones, internet-connected televisions and radios, and PCs. But he said one of the key challenges would be migrating fragmented networks from circuit switching to iternet protocol-based devices.

Imagination, which has a market capitalisation of just under £1bn, is considered a leader in graphics chips and also created the Pure radio brand. The company, shares in which have risen about 50 per cent this year, counts Apple and Intel among its shareholders.

The Hertfordshire-based group publishes its half-year results on Tuesday. It is expected to exceed its target of shipping 200m chips for the full year.

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