Shares of Anglo-German chipmaker Dialog Semiconductor plunged as much as 19% following last week’s report from Nikkei Asian Review alleging that Apple might use an in-house developed power-management chip in future iPhone and iPad models.
Since then, Dialog shares have lost nearly a third of their value. Apple, of course, has cut out several small suppliers in the past, most recently its GPU supplier Imagination.
Reuters says Dialog itself acknowledged this morning that Apple could build its own power-management chips into future iPhones.
Dialog added there was no risk to its existing supply deals in 2018. The Anglo-German chipmaker said it was in the advanced stages of working with Apple on designing “2019-type products” that could lead to commercial contracts by next March.
“Our position remains that we have seen no material change to our ongoing relationship with Apple,” Dialog CEO Jalal Bagherli told investors on a conference call. However, Dialog said for the first time that “Apple has the resources and capability to internally design a power-managamenet integrated circuits and could potentially do so in the next few years.”
The chipmaker does not believe its current expectations of 2018 Apple business would be impacted should the Cupertino giant decide to design the chips itself.
I found the following excerpt particularly telling:
Semiconductor suppliers are typically barred by Apple from revealing their supply relationships. Dialog, which has previously declined to name Apple, referring to it only obliquely as its “largest customer” or its “main business”, said it had received a special dispensation from Apple to mention it.
Dialog derives more than half of its revenue from Apple.
The Nikkei report from last week asserted that Apple might adopt a custom-designed chip to control an iPhone’s battery within the next two years. “Based on Apple’s current plan, they are set to replace partially, or around half of its power management chips to go into iPhones by itself starting next year,” a source told Nikkei.
The Nikkei story basically corroborates an earlier report from analyst Karsten Iltgen who said there was “strong evidence” of Apple working on custom power-management integrated circuits for future handsets. It’s unclear from these reports if Apple’s solution would replace Dialog’s chip in part or completely.
Image courtesy of iFixit