APPLE THREAT SINKS BRITISH CHIP MAKER

MORE than £400m was wiped off the value of tech firm Dialog Semiconductor amid speculation that major customer Apple was about to start making its own chips.

Apple could start replacing the Readingbased firm’s power management chips with its own in-house components as early as next year, sources told Nikkei Asian Review.

The report spooked investors, who yesterday rushed to offload Dialog shares.

Its stock fell 17.9pc, taking the company’s value from about £2.5bn to £2.1bn.

Power management chips designed by Dialog are currently used in Apple’s iPhone, iPad and Apple Watch devices. They control charging and energy use. But a source claimed: ‘Based on Apple’s current plan, they are set to replace around half of its power management chips itself, starting next year.’

However, another source said this was not certain, and that if it does the change might not happen until 2019.

Any switch would be a major blow to Dialog, as the firm relies on Apple for more than 70pc of its sales.

The iPhone-maker is moving to bring more components in-house to reduce its reliance on third-party suppliers and allow it to introduce more exclusive features.

It already designs its own chips used for processing, facial recognition, fingerprint scanning and so-called machine learning.

Earlier this year the Cupertino firm also decided to develop its own graphics chip, ditching former maker UK-based Imagination Technologies.

That decision caused Imagination shares to crash 70pc – crippling the company and wiping about £480m off its value.

The move led to Imagination being controversially sold to China-backed investment fund Canyon Bridge.