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.

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Apple supplier Dialog Semiconductor warned investors that its revenue growth will be lower than expected this year. The news follows a report in November of last year that suggested Apple is developing in-house power management chips, which is what Dialog currently supplies to the company…

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Dialog Semiconductor yesterday announced its Q1 earnings, and CEO Jalal Bagherli played down the possible loss of future business with Apple. The company designs power management chips used in iPhones, and the Cupertino company is estimated to account for around 70% of its income.

Announcing revenues up 23% year-on-year to £332M but profit down 25% to $17.4M, Bagherli tried to strike a positive note as the company waits for news from Apple …

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Update: The WSJ reports that Apple is withholding licensing fees from Qualcomm pending resolution of the legal dispute between the two companies. A source estimates that Apple accounts for around 12% of the company’s total revenue. Qualcomm’s share price is down 19% so far this year.

We saw recently the impact on the share price of Imagination Technologies when Apple announced that it expected to stop using the company’s GPU tech within two years. The stock plummeted by 70%, reducing its market valuation by hundred of millions of dollars.

Not surprising when it turns out that royalty payments from Apple on the company’s chip designs forms almost half of the company’s income – and it is not the only company to be so heavily dependent on Apple’s business …

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