Apple has severed its relationship with a small design firm engaged in tablet development, a report claims. SurfaceInk has been working with Apple for nearly ten years. Founder and chief exec of the firm, Eric Bauswell, told the NY Times yesterday that both companies have now gone in separate directions.

The divorce happened shortly after SurfaceInk showed a prototype tablet device (above) it had designed. While the chief executive declined to disclose details of his former relatiohship with Apple citing client confidentiality, he did suggest the following:

His company was dumped in reaction to “Apple’s growing awareness of our turnkey capabilities….I think they view our capabilities as an opportunity for competitors, “ he said.

In business since 1999, SurfaceInk’s 50 employees do freelance engineering designs for firms like Apple, Palm and HP. It also develops its own devices which it licenses to others — and Apple didn’t want iPad attributes to reach competitors, or so it seems.

We provide high-end engineering and product development services, focusing on the creation of complex and innovative consumer products and devices. With SurfaceInk, your product will meet or exceed your quality expectations while making it to the marketplace in record time. Let us preserve the design you envision. We have the know-how, the experience, and the confidence of product development professionals in practice since 1999,” the company’s website explains.

SurfaceInk claims to have been involved in development of the Xbox 360, and products from Belkin, Aliph and many more.

The straw that broke came when the company showed a 12.1-inch tablet at an electronics trade show. While this was intended only to show what the company was capable of, Apple saw these capabilities as a potential threat.

Speaking of potential threats, Intel seems likely to close its purchase of Infineon’s wireless unit, perhaps as early as today. This will be a $1.91 billion deal to acquire the company, which among other things makes some processor components for the iPhone. Infineon makes the baseband processors that control radio functions.

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