Dialog Fears Apple Inc. (NASDAQ:AAPL) Could Build Its Own Power-Management Chips

The stock for Dialog Semiconductor dropped to about 24% today following the company’s acknowledgment that their top client Apple Inc. (NASDAQ:AAPL) is planning to build its own power-saving chips used in making iPhones. The shares lost its market value to almost half since the first quarter of the year when the company showed concerns that Apple could be on its way out to make its own power chips. Apple has declined to comment on the trending issue.

According to market analysts, Dialog receives more than half of its profits from supplying Apple with Power Management Integrated Circuits (PMICs). The company stated that they are not worried about the current supply deals for next year and they are in advanced stages of negotiating with Apple on designing the ‘2019-type products’ that could extend the business partnership.

Jalal Bagherli, the CEO Dialog denied the reports and stated that their company’s position with Apple is still intact and that there is no any material change to their ongoing relationship. But according to the Anglo-German chipmaker, Apple is a leading company in the market and has resources and capabilities to develop their own PMIC designs and could be on the way to make it alone in the near future.

The Nikkei Business Daily reported recently that Apple is likely to make about half of their iPhone’s PMIC chips as early as next but other sources said that this could start in 2019 or 2020. Most investors have become wary of companies that rely greatly on Apple, following the company’s drastic cut out on various small suppliers in the recent past.

In April, Apple stated their plans to replace the graphics chip key supplier, Imagination Technologies that saw the company losing over 70% shares in a single session. Imagination Technologies was later sold off in two other deals. Apple usually bans its suppliers from revealing their supply agreements and Dialog has been referring to it as their ‘main business’ or ‘largest client’ without revealing their name.

Culver Stinson

Culver Stinson

Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.