Chip maker Dialog lifts forecast as China’s smartphone sales rise

BRITISH chip maker Dialog Semiconductor signalled headwinds in China had eased yesterday, even as tensions with the US remain heightened.

The iphone supplier hiked its forecasts for the second quarter and said it was now expecting operating profit would come in at $216m (£174m) thanks to an expected improvement in revenue. Dialog, which is listed in Frankfurt but headquartered in the UK, said revenue would be $482m for the period, 1pc higher than earlier guidance, and well ahead of the $294.9m posted for the three months to the end of March.

The comments will come as a sign that pressure in China has lifted, after the start of the year saw smartphone shipments in the region hit their lowest level since 2013.

Dialog makes the chips that go into smartphones made by Apple, Huawei and Samsung, although it has recently been trying to expand outside the mobile market amid fears demand is waning. Smartphone makers across the globe had been voicing concern over a slowdown in demand earlier this year, with China having proved a particular area of concern. It is the world’s largest market for smartphones.

Apple’s Tim Cook, for example, blamed the slowdown in growth at the company on weaker economic expansion in China, citing the tit-for-tat trade war with the US as a major factor, while Samsung said “mounting macro uncertainties” had been behind its profit slump. However, speaking in May, Jalal Bagherli, the Dialog boss, agreed the market for phones had been “pretty soft” in China in the first three months of 2019, but said it had since started to pick back up.

The update was likely driven by growth in smartphone sales, RBC Capital Markets analyst Mitch Steves said, adding this “would be a welcomed surprise to the upside given muted expectations for 2019”.

They came as Kantar released data suggesting Chinese customers had started buying more Apple devices, with users of its operating system in the country edging up to almost 20pc. It was actually in the US and Europe where Apple struggled the most in the three months ended June, Kantar said.

The growing demand for Apple in China pours cold water on talk that the Chinese were turning against the American giant in response to US pressure on China’s Huawei.

It comes even as relations between the US and China remain strained, with US president Donald Trump recently saying that he could impose tariffs against China if he wanted.