Dialog Shares Continue to Fall After Company Admits Apple Could Design Own iPhone Battery Chips

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Dialog Semiconductor admitted on Monday that Apple, its top customer, could build its own power management chips for future iPhones without relying on the British-based chipmaker (via Reuters). The comments saw Dialog shares tumble as much as 19 percent, despite the firm claiming there was no risk to its existing supply deals in 2018.

Dialog said it was already 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 Inc," Chief Executive Jalal Bagherli told investors on a conference call.

However, the company acknowledged for the first time that "Apple has the resources and capability to internally design a PMIC and could potentially do so in the next few years".
A report last week claiming Apple would design its own power management chips as early as 2018 came as a serious blow for Dialog, which exclusively designs the current main power management chip for iPhone, iPad, and Apple Watch models. Apple reportedly accounted for nearly three quarters of Dialog Semiconductor's revenue in 2016.

Dialog's PMIC chip controls an iPhone's battery, including charging capabilities and energy consumption. Apple's own design will supposedly be "the most advanced in the industry", according to Nikkei Asian Review, and could enable future iPhones to have a better balance between performance and battery consumption. Taiwanese supplier TSMC will be the exclusive manufacturer of Apple's in-house power management chip, according to the report.

Since last week's report, Dialog shares have lost nearly a third of their value. At one point this morning they were down 15.2 percent at 26.47 euros ($31.38), according to Reuters.
Bagherli said Apple's feedback so far on 2019 product plans had been ?"very good" and that he expected to have more clarity by March on the terms of new business from Apple for 2019. Dialog would update investors when it had more details, he said.

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 emphasized that it had no reason to believe its 2018 business with Apple would be affected if Apple chose to design its own chips, but acknowledged that it would need to meet the company's "technology, quality, price, and volume expectations" if it wanted to remain a key supplier.

Dialog Semiconductor may turn out to be the second large British company to lose major business from Apple with the next couple of years. In April, Imagination Technologies shares plunged after Apple informed the firm it plans to stop using its PowerVR graphics technology in its devices by mid-2019.

Apple looks on course to start designing several other components in-house in the next few years, potentially including ARM-based Mac processors and iPhone modems.

Article Link: Dialog Shares Continue to Fall After Company Admits Apple Could Design Own iPhone Battery Chips
 

PickUrPoison

macrumors 601
Sep 12, 2017
4,424
4,725
Sunnyvale, CA
Fast charging, induction charging, true wireless charging...

The future of smartphone batteries is charging speed and convenience. If the performance of the 8/X line in that regard is an indication, I can see why Apple might consider bringing this tech in-house.
Not so much charging speed, more to optimize the discharge rate. Smarter power management to reduce current draw, for a longer lasting iPhone at any given battery capacity.

Given the capabilities of the in-house team, I think Apple just doesn’t see any reason to buy this from a third party anymore.
 

SoApple

macrumors regular
Sep 21, 2012
228
1,007
Why would you admit that?
It’s like if Apple admitted that iPhone 8 demand was nonexistant.
 

bandrews

macrumors 6502a
Jul 18, 2008
695
1,478
...and that my friends, is why it’s never a good idea to put all your eggs in one basket...
Unfortunately for a lot of suppliers, a contract with Apple is like having one mother of a big basket and lots of tiny ones. No matter how many small baskets you’ve got, you’re always going to feel the pinch if Apple wants to take its basket away.
 

AmazingRobie

macrumors 6502
Jun 10, 2009
288
150
If Apple produces all of the components in their products, who will they blame when something fails and theres a recall...thats right. This is a non issue.
Sometimes just because you can do something all by yourself does not mean that its the smartest idea.
 

mabhatter

macrumors 6502a
Jan 3, 2009
826
189
...and that my friends, is why it’s never a good idea to put all your eggs in one basket...
It’s the “Walmart problem”. You need the exposure and the unit sales. But then they consume more and more of your resources on their products... then dump you because you’re not “innovative” anymore. You never really made good profits off them because they micromanage and penny pinch your process... “your” process becomes “their” process until they take it away.

I expect to see a bunch of their employees moving to California soon.
 

kdarling

macrumors P6
Wait until Apple designs its own baseband chip and dumps Intel.

Never a good idea to get in bed with Apple, unless you only care about short term gain. Apple does not care about their effect on other companies and their employees. It's not in their DNA.

--
Reminds me. Remember how Apple bought AuthenTec, the fingerprint sensor company that everyone in the industry had been sharing for years? Just to keep the faster sensor exclusive?

Wonder what happens to all those people now that Apple is going to concentrate on FaceId instead.
 

macs4nw

macrumors 601
Wait until Apple designs its own baseband chip and dumps Intel.

Never a good idea to get in bed with Apple, unless you only care about short term gain. Apple does not care about their effect on other companies and their employees. It's not in their DNA.

--
Reminds me. Remember how Apple bought AuthenTec, the fingerprint sensor company that everyone in the industry had been sharing for years? Just to keep the faster sensor exclusive?

Wonder what happens to all those people now that Apple is going to concentrate on FaceId instead.
Some of my earlier thoughts on that subject.
 

Will.O.Bie

macrumors 6502
Aug 29, 2016
399
1,043
Having Apple as your "major player" in your business is not very smart business. I understand the impact they have in your company and that's great and all but, they should have seen this coming eventually. I'm sure they have a contingency plan to at least stay in business, otherwise, another company closing down or being bought. I've read so many companies going under because they fully invested everything in Apple, just not good business IMO.
 

szw-mapple fan

macrumors 68000
Jul 28, 2012
1,583
1,027
...and that my friends, is why it’s never a good idea to put all your eggs in one basket...
You’re damned if you do, you’re damned if you don’t. If they didn’t have Apple as their customer, they would never had years of high revenue. On the other hand, they would also not be experiencing the inevitable crash ahead.
 
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techwhiz

macrumors 6502a
Feb 22, 2010
953
1,123
Northern Ca.
Having Apple as your "major player" in your business is not very smart business. I understand the impact they have in your company and that's great and all but, they should have seen this coming eventually. I'm sure they have a contingency plan to at least stay in business, otherwise, another company closing down or being bought. I've read so many companies going under because they fully invested everything in Apple, just not good business IMO.

Walmart, Home Depot, Apple, Costco.........
 

jimthing

macrumors 65816
Apr 6, 2011
1,401
651
London, UK (Europe, Earth, Space)
Why did Apple make this obviously known via Nikkei, BEFORE they're actually doing it?

Why not just wait until you're ready to make the switch to in house, and THEN advise the world at that time?

Just interested in the business decision here for the advanced warning.