According to The Wall Street Journal, Apple was indeed talking with Imagination Technologies about an acquisition. Unfortunately the rumor was updated today claiming that the company would not be making any sort of bids at this time.
Some may know Imagination Technologies is famous for it's PowerVR GPU line-up. The technology has been in use by Apple in its System-on-Chip designs since the A4 processors. An acquisition of Imagination would allow Apple to be one step closer to having its chips made completely in-house.
