Apple is now building its own graphics processors for the iPhone

Apple is already building its own mobile processors for the iPhone and the iPad, but it seems the company is gradually setting sights on crafting its own graphics chips too.

In a recent statement, British chipmaker Imagination Technologies announced the Cupertino titan has notified them it has plans to shift away from contracting third-party manufacturers to build its graphics processors and move production in-house in “two years’ time.”

The maneuver will see Apple develop its own proprietary “graphics design in order to control its products and [reduce] its future reliance on Imagination’s technology.” It will also allow the company to cut costs from current royalty and license agreements with Imagination Technologies.

This puts the British chipmaker in a rather difficult position as Apple accounts for about half of Imagination’s entire revenue. Reuters reported its stock value has plunged over 70 percent since the initial announcement earlier on Monday.

Last year, the Big A confirmed it was mulling acquiring Imagination, but the deal ultimately never panned out. The iPhone-maker does, however, own a small 8 percent stake in the company.

There’s one potential hiccup to Apple’s new plans though. Imagination believes it remains highly unlikely the Cupertino giant can develop new graphics architecture without infringing on its patents:

Apple has not presented any evidence to substantiate its assertion that it will no longer require Imagination’s technology, without violating Imagination’s patents, intellectual property and confidential information. This evidence has been requested by Imagination but Apple has declined to provide it.

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 UK-based manufacturer further remarked it is yet to discuss “alternative commercial arrangements” with Apple, so don’t be too surprised if the two companies eventually patch things up and strike a new licensing agreement.