By Katie Marsal

Published: 09:55 AM EST (06:55 AM PST)

Imagination Technologies, the mobile graphics chip company of which Apple is part owner, is set to announce a partnership with fellow chipmaker MIPS Technologies in an effort to counter competitor ARM Holdings.

According to EETimes, the partnership will be announced this week at the Embedded Systems Conference in Silicon Valley. As first reported by AppleInsider in 2008, Apple purchased a 3 percent stake in Imagination Technologies, and last year the iPhone maker increased its share to 9.5 percent. Imagination Technologies is responsible for the PowerVR graphics technology inside the iPhone and iPod touch.

Imagination's forthcoming partnership with MIPS Technologies aims to help customers who license chip designs from both firms. While MIPS processors are often found in set top boxes, the company has reportedly launched an initiative to move into the handset space. The agreement will not involve the sharing of intellectual property between the two companies -- yet.

Art Swift, vice president of marketing for MIPS, said such a partnership could happen in the future, with co-development between the two companies. But for now, the non-exclusive marketing alliance aims to help offer support to customers that offer system-on-a-chip designs using processing cores from both companies. Swift said that a "series of announcements" between the two companies are forthcoming.

While Apple is a part-owner of Imagination, it also is a licensee of ARM's chip designs, and has even been rumored to be eyeing the company for a potential purchase. However, those rumors were quickly downplayed by the CEO of ARM, who said he saw little benefit in Apple, or anyone, buying his company.

The partnership between Imagination and MIPS was described by EETimes as a "shot across the bow" to competitor ARM. But Tony King-Smith, vice president of marketing for Imagination, said his company will continue to work with ARM and its licensees. He added that Imagination believes Apple will continue to utilize the PowerVR core in its future handsets.

Apple has been making moves in the chip industry in recent years, with recent evidence indicating that Apple purchased chip designer Intrinsity, which is believed to help build the speedy 1GHz A4 custom processor found inside the iPad. Apple also bought fabless chip designer P.A. Semi for $278 million in 2008.