Apple has taken a stake in UK-based Imagination Technologies, a chip designer that also owns the Pure Digital DAB radio brand.

Although Apple was already a licensee of some of Imagination's technology, this move now sees Apple own a 3.6% chunk of the company.

Imagination makes the PowerVR MBX graphics processor core, used in the iPhone, that offers high video performance with minimal power requirements.

Imagination Technology's shares have risen 26% on the news that Apple is now subscribing to 8.2 million shares.

Industry speculation suggests that Imagination's technology is likely to be used in Apple's third gen iPhone, along with the results of Apple's PA Semi acquisition.