Apple signs $600m deal with dialog for assets, staff

(Photo: Peter Parks, AFP)
(Photo: Peter Parks, AFP)

Apple has signed a deal with Dialog Semiconductor to licence the UK chip designer’s power management technology and acquire certain assets, including more than 300 staff.

Apple will pay Dialog an initial $300m plus an additional $300m for product delivery over the next few years. The British firm also won a number of new contracts from the iPhone maker, including the supply of power management, audio subsystem, charging and mixed-signal integrated circuits, according to a statement on Thursday.

Dialog’s shares rose as much as 33.6% in trading in Frankfurt Thursday, the most since October 2002.

The deal comes almost a year after Dialog warned investors that Apple - its biggest customer - could design its own power-management chips in coming years. Dialog relies on Apple for about three-quarters of its revenue, predominantly through the supply of chips that handle charging and manage power in smartphones.

While Apple has developed its own processors for years, the company only recently stepped up the in-house design of components, including graphics, Bluetooth and other phone-related chips. That’s expensive and creates new risks, but helps maintain leverage over suppliers after a wave of acquisitions cut the number of chipmakers it works with.

Apple began using its own graphics chips, or GPUs, in the iPhone 8 and iPhone X. That continued with the recently released iPhone XS and Apple Watch Series 4. Apple uses technology from another UK chip designer - Imagination Technologies - in products like the iPad and Apple TV, but is expected to eventually transition all of its iOS-based products to its own graphics processors.

Following the deal with Apple, Dialog will concentrate on businesses including the Internet of Things, mobile, automotive and computing.

Apple’s new hires consist of around 16% of Dialog’s total workforce, and the US company will also acquire Dialog facilities in Italy, UK and Germany.

Dialog’s 2018 revenue will not be affected by this agreement and the company will continue shipments of current products in production to Apple, the company said in the statement. Dialog will also launch a share buyback program of up to 10% of its outstanding shares following its third-quarter trading update.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER

ZAR/USD
16.28
(-1.02)
ZAR/GBP
21.05
(-0.40)
ZAR/EUR
19.30
(-0.82)
ZAR/AUD
11.89
(-0.59)
ZAR/JPY
0.16
(-0.93)
Gold
1950.13
(+0.16)
Silver
26.80
(-0.79)
Platinum
928.99
(-0.23)
Brent Crude
43.78
(+2.41)
Palladium
2363.00
(+1.68)
All Share
54673.65
(-0.66)
Top 40
50399.16
(-0.59)
Financial 15
9841.32
(-2.14)
Industrial 25
72558.00
(-1.08)
Resource 10
55438.10
(+0.58)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Do you think it was a good idea for the government to approach the IMF for a $4.3 billion loan to fight Covid-19?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes. We need the money.
11% - 1290 votes
It depends on how the funds are used.
73% - 8603 votes
No. We should have gotten the loan elsewhere.
16% - 1893 votes
Vote