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It formed the basis of Graphics Processor Units (GPUs) in Apple's iPhones, tablets, iPods, TVs and watches.
"Over the last few weeks, we have received interest from a number of parties for a potential acquisition of the whole group.
The board has decided to initiate a formal sale process and is engaged in preliminary discussions with potential bidders," Imagination said in a statement late on Thursday.
The company's stock surged over 20 per cent after it issued the statement, media reported on Friday.
Apple announced in April that it would cut its reliance on Imagination within two years.