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Apple In ‘Advanced Talks’ to Buy UK Company, Report Says

Apple Inc. Announces New iPhone And iPad ProApple Inc. Announces New iPhone And iPad Pro
Tim Cook, chief executive officer of Apple Inc., speaks during an Apple event in Cupertino, California, U.S., on Monday, March 21, 2016. Cook is expected to unveil a smaller iPhone Monday in attempt to woo those who are holding on to older versions. Photographer: David Paul Morris/Bloomberg via Getty ImagesDavid Paul Morris — Bloomberg via Getty Images

Update 12:38 p.m. ET: Apple has issued a statement, saying that it does not currently plan to acquire Imagination Technologies. Click here for Fortune’s follow-up article.

Apple could be on the lookout for another acquisition.

Apple (AAPL) is currently in “advanced talks” to acquire UK-based processor maker Imagination Technologies, ArsTechnica is reporting, citing sources. The technology news site did not say how much Apple would be willing to pay for Imagination Technologies, though as of market close on Monday, Imagination Technologies’ market cap stood at 508.7 million pounds (approximately $723.8 million).

Imagination Technologies makes several components designed for everything from communications to processing power. However, the company’s most notable product is its PowerVR graphical processing unit, which has been used by Apple for the last several years in its iPhones and iPads. Acquiring Imagination Technologies would bring the design of graphical processors in-house and give Apple far more control over the graphical capabilities built into its mobile devices.

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The time might be ripe for Apple to make a move. Imagination announced in February that it had planned to reduce its operating costs substantially in 2016 as it faces increasing competition from companies in a wide range of markets, including processors and the Internet of things. In addition, Imagination announced that its then-CEO Hossein Yassaie would step down to be replaced by interim chief executive Andrew Heath.

Imagination added in a statement on March 17 that it would focus its efforts on the PowerVR line, which has helped buoy its business despite trouble in other areas, and would consider selling its consumer electronics business Pure. In total, Imagination hopes to cut its costs in the next year by $39 million.

Shareholders have taken notice of Imagination’s troubles. Prior to news that Apple may consider acquiring the company, Imagination’s shares on the London Stock Exchange were down 17.3% in one year. On Tuesday, however, the company’s shares were up 18% on news of Apple considering an acquisition, boosting its market cap nearly $100 million.

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Apple is keenly aware of Imagination’s troubles. Not only does the company work with Imagination for its graphics components, but it also owns a stake in the UK-based firm. The company is said to have acquired a stake of nearly 10% of Imagination Technologies between 2008 and 2009.

Apple hasn’t commented yet on whether it’s interested in acquiring Imagination, and like its graphics partner, did not immediately respond to a request for comment.

However, Apple has made some strategic acquisitions to improve its components operation in recent years. The company in 2013 acquired PrimeSense, an Israel-based semiconductor company, for $345 million to boost its processor-design operation. That followed a 2008 acquisition of Apple partner P.A. Semi for $278 million and a pick up in 2010 of semiconductor company Intrinsity for $121 million.

Here’s the One Surprise From Apple’s Event Yesterday

While it’s unclear what Apple would do with Imagination’s other businesses, it’s clear that the company could see value in Imagination’s PowerVR division. It’s unknown whether Apple would buy all of Imagination or just a slice. But given Imagination’s recent moves, it seems likely that the company is ready and willing to look at some deals, if offered.

Apple’s last-reported acquisition was in January, when it reportedly acquired Flyby Media, a company that makes augmented reality software.