Shares of Dialog Plummet After Warning That Apple Might Make Chips

Andrew Cummings
December 4, 2017

Dialog intends to continue to closely support Apple in developing and supplying sophisticated next generation power management and mixed signal technology for use in Apple's products. Dialog stated that the company does not have reason to believe its current expectations of 2018 Apple business would be impacted by such potential actions by Apple.

A Financial Times report today confirms the rumor: "Apple supplier Dialog Semiconductor slumped again on Monday after the Anglo-German group said it recognized its largest customer could move design for one of its chips in-house 'in the next few years.' As noted in the chart below has fallen further to 25.84 Euros (will fluctuate)".

Suppliers of semiconductors are barred typically by Apple from speaking about supply relationships.

On Monday, Dialog Semiconductor announced that its biggest customer Apple might build its own chips for power-management for future iPhones instead of relying on the chipmaker, helping to send the company's shares plummeting up to 19%.

The U.S. technology company said in April it planned to replace graphics chip supplier Imagination Technologies, sending its shares down 70 percent in a single session.

Imagination has since been sold to China-backed Canyon Bridge Capital Partners for £550 million ($740 million), well below the £2 billion ($2.7 billion) it was worth at its peak in 2012. But the company said it received a special dispensation from Apple to mention its name this time around.

"The shares appear to have instantly priced that Apple will design out Dialog partly or almost completely", Morgan Stanley said in a note to investors.

Bagherli said that Apple's feedback on 2019 products has been "very good" and Dialog will know more come March when new business terms are expected to be signed with Apple for 2019.

Dialog said it would give investors an update when more details become available, said the CEO.

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