Apple to buy part of Dialog’s business in $600m deal

SAN FRANCISCO/FRANKFURT: Apple Inc is to buy part of Dialog Semiconductor Plc’s business in a $600 million deal, expanding the iPhone maker’s chip operations in Europe and securing the German-listed company’s role as a supplier to the US tech group.
Dialog’s shares rose by 34 per cent in Frankfurt early on Thursday as the deal settles questions about future relations between Apple and Dialog, whose stock tumbled earlier this year when it said Apple planned to use chips from another supplier.
The acquisition is unusual for Apple, which rarely does such deals, and is larger than previous transactions. Apple bought Israel’s PrimeSense, creator of the facial recognition application used to unlock newer iPhones, for about $350 million in 2013.
Since the first iPhones a decade ago, Apple has used Dialog power-management chips to manage their battery life. Under the deal, Apple is buying patents, a team of about 300 engineers, most of whom already worked on chips for Apple devices, and Dialog offices in Britain, Italy and Germany.
Dialog said its 2018 revenue would not be affected and it would continue shipments of existing main power management integrated circuits (PMICs) to Apple. It expects to sell current and future generations of so-called sub-PMICs to Apple.
“We are not selling our PMIC business,” Chief Executive Jalal Bagherli told analysts.
After the deal, Dialog expects Apple to account for 35-40 per cent of its total revenues in 2022. That is down from around 75 per cent in the current year. Headcount will fall to 1,800.
The Anglo-German chipmaker also said it would begin a share buyback programme for up to 10 per cent of its stock following its next quarterly trading update.
Other chip designers in Europe have struggled to manage their relationship with Apple due to its sheer scale. Britain’s Imagination Technologies ended up being sold to a Chinese-backed fund last year after losing Apple as a client.
Shares in Austria’s AMS, which competes with Dialog in areas such as power-management chips, fell by 3.8 per cent. — Reuters