Apple Cuts Chip Order From Dialog Semiconductor by 30%

Fabless chip designer Dialog Semiconductor has lost a big chunk of revenue after Apple cut its main power management chips (PMICs) order by 30%.

The Cupertino giant announced that it’d be sourcing its PMICs (for one of its iPhones) from two suppliers instead of just Dialog. Apple gave no reason for the cuts, though the company is reportedly developing its own power management chips (and the consumer titan is apparently poaching Dialog employees towards that very purpose).

Seven months ago, when Apple first announced its in-house chip designs, Dialog stock fell by 15%, and since then, the UK OEM’s stock lost more than half its value.

Dialog has downplayed the news, noting their contract with Apple through 2020, though a drastic cut from the source of up to 70% of its business will obviously rattle some cages.

Dialog Chief Executive Jalal Bagherli claimed that Apple could just be hedging its bets.

"If you think about the fact that we are qualified for all three phones, that means there is no performance-related issue. It might be a statement of intent to reduce risk on having one supplier and have an alternative source," he said.

And while Dialog’s profits were down 25% to $17.4M, its year-over-year revenues were up 23% to $440M.

Apple is supposedly launching its PMICs in 2019, so we’ll probably get a better handle on this news by next year.

Read more here: https://finance.yahoo.com/news/dialog-says-apple-source-fewer-173250812.html