Apple Inc has recently signed a $600 million deal with partner Dialog Semiconductor PLC that will provide a major boost to internal chip development efforts and provide more control over the iPhone supply chain.
The agreement that was announced on Thursday October 11th builds on over a decade of collaboration between the two companies. Since the production of the first iPhone, the U.K.-based Dialog is responsible for supplying power management chips to Apple. The long relationship has helped Dialog to generate about three-quarters of its annual revenues over the past few years.
Apple will pay $300 million to license intellectual property associated with Dialog’s power management chips and hire more than 300 engineers who have been responsible for the development of the technology. The staff workers will engage over four facilities in the UK, Germany, and Italy to merge into Apple’s existing network of semiconductor centers.
Out of the $600 million transaction value, the other half will be used towards new chip orders. Apple is acquiring Dialog to help in supplying integrated circuits concerning power management, audio, charging and other device functions over the next 3 years. Dialog mentioned that the arrangement will reduce the share of its total revenues accounted for by Apple to as low as 35% in 2022.
That’s a significant win for the British company that has come back struggling from investors worrying about its dependence on the iPhone maker. As per Dialog, the company will look forward to “sharpen” its focus in other areas including storage, automotive, and internet of things market from the money that will be generated after the acquisition. This move by the company was considered very positively by shareholders and as a result of that Dialog’s stock closed nearly 27% higher on Thursday on the Frankfurt Stock Exchange.
Apple on the other side has made a valuable addition to its chip development operations. The acquisition of Dialog’s power management assets will not only boost its broader semiconductor plans but also provide more control to the iPhone and other related products.
There are reports that Apple is currently diversifying its efforts for internal chip design in order to become less dependent on outside suppliers. According to August leak, the company’s latest iPhone models are based on homegrown processor called the A12 and now the tech giant is planning to bring something innovative with Macs as well by 2020.
Now, the iPhone maker is complaining about its hardware design capabilities in other areas as well. To produce different parts of their products being sold, the company is keeping an eye on acquiring new ventures. Couple of month’s back Akonia Holographics LLC, a startup focusing on the development of lens for augmented reality headsets was acquired by the company. Last year too, the company picked InVisage Technologies Inc