The rumor mill is buzzing like crazy at this instant. It suggests Apple is planning to give another one of its chip suppliers a massive jolt. Based out of Reading (U.K.), Anglo-German chipmaker Dialog Semiconductor is on the verge of losing its primary supply contract in the form of the Cupertino giant, reports Reuters.
The analysts at German private bank Bankhaus Lampe have downgraded its rating for the chipmaker from ‘hold’ to ‘sell’ in the latest research note. It further suggests that Apple is planning to cut down its dependence on Dialog’s power management integrated chips (PIMC). The Cupertino giant will most likely develop an in-house replacement for these chips, putting them to use as early as 2019. In a research note published today, Karsten Iltgen, an analyst at Bankhaus Lampe said:
There is strong evidence that Apple is developing its own power management integrated circuits and intends to replace the chip made by Dialog at least in part.
The research note further cites industry officials and continues to mention that Apple has started work on developing its own power or battery saving chips. The tech giant is currently said to be involved in establishing power management design centers in California and Munich. It is a significant setback for Dialog Semiconductor, whose revenue are largely constituted of Apple’s sales. Cupertino is said to account for more than 70 percent of the company’s 2016 sales.
It is also believed that 80+ engineers are working on a power management chip, most of whom are being poached from Dialog itself, stated sources aware of the development. The same teams could also be working on the designs of the company’s upcoming graphics chips.
This development comes closely on the heels of Apple dropping Imagination Technologies as the suppliers for graphics chips used in iPhones and iPads. The Cupertino giant has notified the British firm that it will be phasing out the use of its intellectual property (IPs) in upcoming products, including the iPhone, iPad, TV and Apple watch.
This transition is expected to happen in the coming two or fewer years’ time, which will see Apple not license the former’s technology and instead develop its own independent graphics design. This news was of great significance to Imagination Tech as Apple is a major contractor and amounts for 74 percent of their total sales. This caused the shares prices to tumble down over 72 percent.
Similar is the case with Dialog Semiconductor. Due to the analysts’ speculations, the chipmaker’s share prices tumbled as much as 36 percent to reach a seven-month low. Their shares were trading down around 34 euros at 8:00 am GMT, but it seems to have bounced back to 38 euros at the time of drafting this story. The share prices have slipped down from the previous day’s closing price of around 48 euros.
Apple is already renowned to be developing its own custom A-series chips for the widely popular iPhone devices, but it now seems to be planning to expand its scope beyond the same. With a new Mac Pro finally in the works, the Cupertino giant is presently designing a new chip that’ll be way powerful than currently employed Intel processors. The company seems to be adopting the ideology to bring all chip designing and manufacturing processes in-house to avoid patent battles and lawsuits with such chipset suppliers – who usually depend on royalties and licensing agreement for revenues.
