Apple may ditch Dialog, hitting chipmaker's shares: analyst

PanARMENIAN.Net - Dialog Semiconductor risks losing a crucial supply deal with Apple Inc, according to a financial analyst who cut his rating on the stock on Tuesday, April 11, sending the Anglo-German chipmaker's shares down by as much as one-third, Reuters reports.

Bankhaus Lampe reduced its rating on Dialog to "sell" from "hold" as it argued that Apple was working on its own battery-saving chip for the iPhone that could replace Dialog's power management integrated circuits (PMIC) as early as 2019.

Apple accounted for more than 70 percent of Dialog's 2016 sales, analysts estimate. The German company says it is the world's top maker of power management chips used in smartphones with roughly 20 percent of the market.

Shares in Dialog fell as much as 36 percent on Tuesday to a seven-month low. They had more than doubled in the second half of 2016 on rising expectations for the iPhone 8 due out later in 2017. By 1052 GMT, they had pared losses by half to trade down 19 percent at 37.70 euros ($38.87).

Apple's suppliers are in the spotlight after Imagination Technologies (IMG.L) last week revealed Apple's plans to replace its graphics chips with parts it is developing in-house, sending shudders through Apple's global supply chain.

Imagination's stock plunged 70 percent.

Bankhaus Lampe cited unnamed industry sources as saying that Apple was setting up power management design centers both in Munich and California and said Apple already had around 80 engineers working on a power management chip of its own.

"In our view, there is strong evidence that Apple is developing its own PMIC and intends to replace the chip made by Dialog at least in part," Bankhaus Lampe analyst Karsten Iltgen said, referring to power management chips.