Imagination Technologies announced that they wanted to buy MIPS for $60 million back in November. Several weeks later they were outbid by a company called Ceva; they wanted to buy the company for $90 million. According to Reuters, today Imagination has said they’re now willing to fork over $100 million.

Who are all these companies and why should you care? Imagination Technologies designs graphics processors that companies then license to put on their chips. Chances are you’ve heard of the “PowerVR” brand. That’s Imagination’s work. Who uses PowerVR GPUs? Their most famous client is Apple. Samsung used a PowerVR GPU in the Galaxy S, but then they switched to ARM’s GPUs starting with the Exynos 4 line.

MIPS is a company that kind of sort of competes with ARM. Products like your cable box have MIPS chips insides. There’s an Android port that runs on MIPS, but it hasn’t seen widespread adoption.

Why does Imagination want MIPS? We’re going to go out on a limb here and say Imagination wants to get in on the system on chip game. They want to be like Qualcomm or Texas Instruments or NVIDIA, meaning they want to design a solution that they can then sell to companies to shove into their products. Why bother? There are higher margins in selling chips than licensing graphics processors.

What impact, if any, will this acquisition have on Android? If Imagination plays their cards right, they could position themselves as an ultra low cost alternative to ARM. We have to wait until the deal goes through however, and then another year or two after that to see any real meaningful products hit the market.

Will Ceva outbid Imagination again? You never know. Maybe. It’s telling that Imagination’s first bid was $60 million. Now it’s $100 million. If we were shareholders in MIPS Technologies, we’d want to know how high Imagination is willing to go.

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