Published: Thu, April 13, 2017
Technology | By Timothy Carter

There's a reckoning among companies that built themselves up around Apple

There's a reckoning among companies that built themselves up around Apple

Apple, which accounted for more than 70 percent of Dialog's 2016 sales by Lampe's estimates, is working on its own battery-saving chip for the iPhone that could replace Dialog's power management integrated circuits (PMIC) as early as 2019.

Shares of Anglo-German manufacturer Dialog Semiconductor (XETRA:DLG-DE) fell 20 percent on Tuesday morning after a financial analyst warned the company may lose a contract with the US tech giant Apple.

Apple (AAPL) is unlikely to develop its own radio frequency chips for iPhones, making it less likely Broadcom (AVGO), Qorvo (QRVO), or Skyworks Solutions (SWKS) could be displaced by the iPhone maker, says a Pacific Crest Securities analyst.

Engineers from Dialog have reportedly been switching over to Apple over the past year, a source said, according to Bloomberg. Tech stocks .SX8P were the biggest sectoral losers, down 0.8 percent after Dialog Semiconductor dropped 18.4 percent.

However, things might change in 2018 when it decides to move power management chip design in-house as well.

Dialog, meanwhile, is said to derive 50% of its revenues from sales of PMICs to Apple and the loss of that particular socket would, on the face of it, affect the company significantly.

Last week, British graphics chip maker Imagination Technologies' stock dropped almost 63% after Apple announced it would stop using the company's products completely within two years.

After the Imagination Technologies news made the rounds, comments flew across the internet about the relative pros and cons of having Apple as your biggest customer: Some even said that a company of Apple's size had the power to make or break entire industries, let alone a manufacturing firm or two. Reuters, citing sources within German investment banks, has reported that Apple has plans to build their own battery management chips as well. By 0831 GMT they were trading down 23.7 percent at 36.39 euros. About 80 engineers are already working on the Power Management chip.

Do you feel that Apple's custom PMIC and GPU will be found in iPhones and iPad devices starting from 2019? The iPhone, iPad, iPod touch, Apple Watch, and Apple TV all use Apple's in-house designed A-series CPUs.

Apple's Mac GPU suppliers should also be concerned in theory, but any threat they face would be many years away, if at all. Many team members are said to have been drafted in from Dialog over the past year, although the companies have previously transferred staff members due to their close collaboration.

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