DENVER — Speculation that Apple will begin designing its own power management chips by next year could be bad news indeed for its primary supplier of these parts, Dialog Semiconductor.
Japan's Nikkei reported Thursday (Nov. 30) that Apple is designing its own power management chips for use in iPhones as early as next year, adding fresh fuel to a fire that has been smoldering for months. The story, which cites unnamed sources, caused Dialog's stock price to plummet nearly 18 percent in one day.
Speculation that Apple will bring its power management chip design in house is not new. In April, Dialog's stock value dropped by 20 percent after analyst Karsten Iltgen at Bankhaus Lampe warned there was strong evidence that Apple was developing its own power management chips in an effort to replace Dialog at least in part.
News that Apple was creating its own graphics decimated Imagination Technologies earlier this year, ultimately resulting in it agreeing to a takeover by China-backed Canyon Bridge Venture Partners in September. (That deal, worth about $675 million, has yet to close).
According to Kevin Anderson, a senior analyst covering power semiconductors at IHS Markit, Apple moving power management IC design in house makes sense because of the relationship between power management and the applications processor and battery of the iPhone. "They [Apple] have a tendency to bring everything in house that they can, whether that is for cost or other reasons," Anderson said in an interview with EE Times Thursday.
Apple represented about 74 percent of Dialog's revenue in 2016. According to Anderson, that's down from about 80 percent in 2015 — the result of Dialog's efforts to diversify its product portfolio, largely through acquisition. Though Dialog has been dogged by questions about the health of the relationship with Apple, the company has continued to say that as far as its visibility extends it expects sales to Apple to remain at or near present levels.
A spokesperson for Dialog told EE Times via email: “The level of visibility into the design cycle of our leading customers remains unchanged and the business relationships are in line with the normal course of business.”
Anderson added that Dialog's products are pervasive throughout Apple's portfolio, including the Apple Watch and other products. He also speculated that Apple would not be able to completely eliminate Dialog as a supplier right away.
While the rest of Dialog's business has been growing faster than its mobile business, a loss or major reduction in business from Apple would obviously be a major blow to Dialog, Anderson said. "Obviously you can't overnight replace 74 percent of your revenue," he said.
Dialog did not immediately respond to request for comment.
— Dylan McGrath is the editor-in-chief of EE Times.