Chip maker Imagination Technologies hit by losses as spend on R&D grows

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Loss: Imagination Technologies makes the graphics and processing technology used in iPhone screens

Imagination Technologies plunged to a half-year loss after it ramped up research and development spending to reduce its dependence on mobile phones.

The British chip designer makes the graphics and processing technology used in iPhone screens, but sales of high-end mobile phones are slowing.

Imagination is now working to get into the ‘internet of things’ – a fast-growing market that will see ordinary household items such as TVs and fridges connected to each other over the internet to improve efficiency and energy use.

It is currently working on technology behind a home hub that will be the central connecting point for domestic items, which it hopes to release in the next two years.

Imagination made a six month pre-tax loss of £10.7million, down from a profit of £2.2million in the same period last year after sales fell from £385.2million to £82.2million.

Shares in the company climbed more than 16 per cent to close 31p higher at 221p.