Dialog has been part of the Apple supply chain for some time, but has faced financial uncertainty amidst rumors Apple is developing its own power management chips. In an interesting turn of events this morning, Apple and Dialog announced a new business agreement where Apple will license power management technology from Dialog, in exchange for an upfront $300 million payment and another $300 million in purchase agreements over the next three years.
In addition to transferring technical assets, the company announced Apple is hiring the ~300 staff who currently work at Dialog on Apple-related projects. This deal dramatically helps ramp up Apple’s custom chip efforts in areas like power management and charging.
Try Amazon Prime 30-Day Free Trial
Shares in Dialog rose in premarket trading on the news. For Dialog, this agreement ensures some stability over the next three years, thanks to pre-purchase commitments from Apple that it will continue to buy its products for a while yet.
However, it is possible that revenues will fall when the four-year term of the agreement is up, as Apple will presumably be ready to use exclusively its own chips (based on the technology it is now acquiring from Dialog) by then.
300 staff, mostly engineers, represents a huge investment for Apple. That’s around 16% of Dialog’s workforce. Apple will take over Dialog facilities in Livorno (Italy), Swindon (UK), and Nabern (Germany). Not only will Apple benefit from a highly skilled team of power management chip engineers that are already familiar with Apple’s products, it also helps it gain more of a footing across Europe for chip research and development.
Apple has seen a lot of success making custom chips, most notably the A-series processors in its iOS devices which benchmark far ahead the rest of the industry. Apple has recently begun designing its own GPUs, and this latest announcement puts it firmly on track to create power management and battery ICs, and maybe even other chips relating to audio technologies.
TechCrunch got a statement from Apple SVP Johny Srouji’s on the news:
“Dialog has deep expertise in chip development, and we are thrilled to have this talented group of engineers who’ve long supported our products now working directly for Apple,” said Srouji, in a statement. “Our relationship with Dialog goes all the way back to the early iPhones, and we look forward to continuing this long-standing relationship with them.”
The deal is subject to regulatory approval and is expected to close in the first half of 2019.