Published: Wed, December 06, 2017
Industry | By Dora Warner

Chipmaker Dialog plunges further on fears Apple could go it alone

Chipmaker Dialog plunges further on fears Apple could go it alone

Dialog supplies power management chips for Apple's iPhones, iPads and watches which accounts for three-quarters of its revenues a year ago.

On Monday, Dialog Semiconductor announced that its biggest customer Apple might build its own chips for power-management for future iPhones instead of relying on the chipmaker, helping to send the company's shares plummeting up to 19%.

"Apple is obviously not helping Dialog to win this argument with investors".

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The analyst furthers suggest that Dialog would maintain a relationship with Apple, but would no longer be the "single source" for power management chips.

According to a regulatory filing on Tuesday, a subsidiary of Chinese chipmaker Tsinghua Unigroup Ltd increased its stake to 7.15 percent on November 30, the day Dialog shares fell by 20 percent on a report that Apple may design its own power-management chips.

However, it was acknowledged by the company for just the first time that Apple holds the capability and resources internally to design PMIC and could possibly do so within the next couple of years.

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The Nikkei business daily last week quoted one source as saying Apple would make about half the iPhone's power-management chips starting next year, with another source saying this could be delayed to 2019. Imagination was sold off following that in two different deals.

Dialog stock fell 24 percent to 23.70 euros (£20.8). Royal Bank Of Canada set a €50.00 ($59.52) price objective on shares of Dialog Semiconductor and gave the stock a buy rating in a report on Friday, October 6th. The brokerage said the reaction could prove overblown and that Apple may still decide to stick with Dialog rather than developing its own power chips.

Bagherli said that Apple's feedback on 2019 products has been "very good" and Dialog will know more come March when new business terms are expected to be signed with Apple for 2019.

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