LONDON Imagination Technologies Group Plc, the designer of video chips used in Apple Inc's iPhone, is to pay $27 million (17 million) for Caustic Graphics to help bring cinema-quality 3D graphics to mobile phones.
Imagination also posted a 131 percent rise in adjusted pretax profit to 10.1 million pounds, on revenue up 16 percent to 44 million in the six months through October after its partners shipped 107 million of its chips.
The company, which also makes Pure-branded digital radios, said on Tuesday it remained confident of continued good progress and was on track to exceed its target of shipping 200 million chips in the year to end-April 2011.
Chief Executive Hossein Yassaie said the group had signed new and extended licensees with chipmakers ranging from Apple and Intel, both shareholders in the business, to Samsung and Fujitsu, keeping it ahead of competition from the likes of ARM Holdings Plc.
"We are doing repeat business with a lot of our customers, we are securing new customers," he said in an interview. "If you look at volume and actual devices shipped, we are talking about 100 million units, and some of our competitors have nothing to show."
Shares in Imagination, which have risen 62 percent in the last 12 months, were up 4.8 percent at 376.7 pence by 10:12 a.m.
Analysts at JP Morgan said it was a strong set of results for the semiconductor side of the business and investors would discount a weak performance, as flagged by management, in Pure radios.
Yassaie said Pure had experienced tough times but had seen improvements since October and initial numbers for Christmas in the UK were looking encouraging.
On the Caustic deal, he said Imagination would incorporate the latter's techniques for rendering three-dimensional graphics into its graphics processors, initially for TVs and games consoles and later for mobile phones.
"We would not have acquired this technology if we did not believe we could get it into handsets," he said.
Last month, Imagination agreed to buy HelloSoft for up to $47 million to boost its capabilities in Wi-Fi, and raised $60 million from shareholders for the deal and further buys.
(Editing by Dan Lalor and David Holmes)