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Dialog Semiconductor Hobbled by Apple’s Change of Plans

June 2, 2018
Dialog Semiconductor Hobbled by Apple’s Change of Plans

Apple is again throwing its weight around in the semiconductor industry. Dialog Semiconductor, the company's primary source for power management chips, said in a statement that Apple would introduce a second source for the main PMIC components used in its smartphones. That means Apple will order fewer chips from the company in 2018 than Dialog originally expected.

Dialog projects orders of power management chips embedded in Apple’s tablets, wearables and personal computers to remain unchanged. In addition, the company expects to continue supplying another power management chip used inside Apple’s smartphones, the sub-PMIC, in the same volumes. Some analysts estimate that the company owes more than 50 percent of its revenue to Apple’s patronage.

Jalal Bagherli, Dialog’s chief executive officer, said on a conference call that Apple was probably trying to reduce the risk of relying upon a single manufacturer for chips managing battery power inside its smartphones. Bagherli also said it was likely that Apple would design power management chips in-house, a possibility rumored over the last year that has hammered Dialog’s share price.

“Dialog understands its continued role as Apple’s main PMIC supplier is contingent on Dialog meeting Apple’s technology, quality, price and volume expectations, as well as continuing to develop advanced technology to meet Apple’s requirements,” the company said in the Friday statement, which sparked an overwhelming negative response from investors. Dialog’s shares have plunged around 15 percent since the announcement and have barely recovered.

The company said that its customer’s change of heart would only shave around five percent from its annual revenue and that its business would still report growth in 2018. Dialog has been trying to expand into new businesses in recent years, most recently through its $330-million acquisition of mixed-signal chip supplier Silego Technology. On Friday, the company said it would look into mixed-signal opportunities inside future Apple products.

About the Author

James Morra | Senior Staff Editor

James Morra is a senior staff editor for Electronic Design, where he covers the semiconductor industry and new technology trends. He also reports on the business behind electrical engineering, including the electronics supply chain. He joined Electronic Design in 2015 and is based in Chicago, Illinois.

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