Dialog Semiconductor Tumbles After Analyst's Apple Warning

Apple is now working with Germany's Dialog Semiconductor which said it has already designed the battery management chips for the iPhones set to release in 2017 and 2018. Dialog shares fell 36% this morning but are now down 15% from yesterday.

There is solid confirmation that Apple is building up its own power management incorporated circuits and plans to supplant the chip made by Dialog at any rate to a limited extent. The company has been poaching Dialog engineers to join Apple. 70% of Dialog's sales in 2016 came from trade with the Californian tech giant, estimates show. By optimizing and using its internal solution, Apple could optimize power and performance with its internal graphics engine. Even if it does not manage to make the chips itself, it can always threaten its existing suppliers with the move.

Earlier this month, the shares of Imagination Technologies, a United Kingdom chip designer, sank more than 60 percent after Apple said it would cease a contract to use its products. Apple also intends to build their own custom GPUs for its iOS devices within two years.

"Dialog's chip has continued to help iPhone outperform high-end Android smartphones on power consumption and battery life", they added. Combined with the reported power management chip development and the ongoing lawsuit against Qualcomm over modem licensing fees that suggest Apple's plan to use modems designed in-house for future devices, it appears that Apple is looking to own its core technologies instead of acquiring components from suppliers. A spokesperson declined to comment. Shares in Balfour Beatty BALF.L were the biggest gainers, up 5.9 percent, while Givaudan GIVN.S jumped 3.5 percent after its first quarter sales beat a Reuters poll. If done correctly, Apple could create an iPhone that is more battery-efficient than the competitions which would certainly give the company an advantage. Apple is establishing their power-management design centers in Munich and California.

Dialog, which supplies chips to Apple's iPhones and iPads, employs about 1,300 engineers, predominately in the United Kingdom. Net Net: we would buy the dip given the Company's visibility, which extends notably further than the 2017 version of the iPhone.

  • Patricia Jimenez