Ap­ple strikes $600m Dia­log deal

The Irish Times - Business - - MARKETS -

Ap­ple has agreed to buy a por­tion of chip sup­plier Dia­log Semi­con­duc­tor’s busi­ness in a $600 mil­lion (€518 mil­lion) deal, the two com­pa­nies said yes­ter­day, ex­pand­ing the iPhone maker’s chip op­er­a­tions in Europe.

Since the first iPhones a decade ago, Ap­ple has used Dia­log power-man­age­ment chips to man­age their bat­tery life. Ap­ple is buy­ing patents, a team of about 300 en­gi­neers, most of whom al­ready worked on chips for Ap­ple de­vices, and Dia­log of­fices in Bri­tain, Italy and Ger­many. Dia­log said its 2018 rev­enue would not be af­fected and it would con­tinue ship­ments of ex­ist­ing prod­ucts to Ap­ple. For now, the deal set­tles ques­tions about fu­ture re­la­tions be­tween Ap­ple and Dia­log, whose shares tum­bled this year when it said Ap­ple planned to use chips from an­other sup­plier, which was widely be­lieved to be Ap­ple it­self. Dia­log’s shares rose 17 per cent in pre-mar­ket trad­ing in Frank­furt, as the Ap­ple deal se­cured their busi­ness re­la­tion­ship for the next three years.

The An­glo-Ger­man chip­maker also said it would be­gin a share buy­back pro­gramme for up to 10 per cent of its stock fol­low­ing its next quar­terly trad­ing up­date. Other chip de­sign­ers in Europe have strug­gled to man­age their re­la­tion­ship with Ap­ple due to its sheer scale. Bri­tain’s Imag­i­na­tion Tech­nolo­gies ended up be­ing sold to a Chi­nese-backed in­vest­ment fund last year af­ter los­ing Ap­ple as a client. Half of the deal’s value, or about $300 mil­lion (€259 mil­lion), is cash for the Dia­log en­gi­neers and of­fices and the other $300 mil­lion is pre-pay­ment to Dia­log for sup­ply­ing chips over the next three years. Dia­log said it would con­tinue to de­liver chips to other cus­tomers, fo­cus­ing on the au­to­mo­tive and in­ter­net-of-things mar­kets.

“This trans­ac­tion reaf­firms our long-stand­ing re­la­tion­ship with Ap­ple, and demon­strates the value of the strong busi­ness and tech­nolo­gies we have built at Dia­log,” chief ex­ec­u­tive Jalal Bagherli said.– Reuters

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