Dialog falls further on fears Apple could go it alone

Shares in Dialog Semiconductor dropped as much as 23 per cent on Monday after the company acknowledged for the first time that top customer Apple could develop its own battery-saving chips used in iPhones.

The stock has lost half its value since April on investor concerns that Apple is working on its own power chips. Analysts reckon Dialog derives more than half its revenue from supplying Apple with power management integrated circuits (PMICs). Dialog said there was no risk to its existing supply deals in 2018 and 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,” Chief Executive Jalal Bagherli told investors on a conference call. However, the Anglo-German chipmaker conceded: “Apple has the resources and capability to internally design a PMIC and could potentially do so in the next few years.” Apple declined to comment. 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. “Even if Dialog is safe for 2019, people are going to question 2020 and if they are safe in 2020, they will question 2021,” Credit Suisse analyst Achal Sultania said “Apple is obviously not helping Dialog to win this argument with investors”. Investors are wary of companies that rely heavily on Apple, which has cut out several small suppliers in the past. The US tech giant said in April it planned to replace graphics chip supplier Imagination Technologies, sending its shares down 70 per cent in a single session. REUTERS