Dialog extends Apple deal

11 OCT 2018

Dialog Semiconductor announced a deal which will see it receive $600 million from Apple for products, some assets and prepayment for future orders, following questions as to how the companies’ relationship would develop.

In a statement, Dialog said with the licensing of some power management technologies, the transfer of some assets and more than 300 staff who have “worked closely with Apple for many years” crossing-over, the transaction paves the way for a closer relationship between the companies.

Reports late in 2017 suggested Apple could be looking to bring its power management chip development in-house. With Apple being a significant customer for Dialog, the UK-based company was forced to defend its position, stating it did not have reason to believe Apple was looking to phase it out.

But there were precedents: graphics technology company Imagination Technologies was acquired by a private equity firm after it lost Apple as a customer, forcing it to “change course”.

Significantly, the new deal with Dialog covers “a broad range of new contracts from Apple for the development and supply of power management, audio subsystem, charging and other mixed-signal integrated circuits”. Revenue from the new agreements is expected to begin in 2019, and pick up pace in 2020 and 2021.

Jalal Bagherli, CEO of Dialog, said: “We believe that this transaction is in the best interests of our employees and shareholders who will benefit from a business with enhanced focus, strong growth prospects and additional financial flexibility to invest in strategic growth initiatives.”

The transaction is expected to close early in 2019, subject to regulatory approvals and other closing conditions.

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Steve Costello

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