Apple is developing in-house power management chips, German analyst reports

Elbert EdwardsApr 13, 2017

Banks fell to a one-month low, while Dialog Semiconductor Plc led technology shares to the worst drop among industry groups after Bankhaus Lampe warned that Apple Inc. may cut back on its use of the company's chips.

The chip is said to be under development in California and Munich, with reports claiming that Apple is trying hard to recruit top engineers from Dialog to work in Munich.

A different source familiar with the matter confirmed the news, saying that Apple is poaching Dialog engineers in Munich "like insane". Due to the close nature of Dialog's relationship with Apple, it isn't unusual to see a steady flow of employees to and from the two companies, the person said.

The company will, according to the report (via Reuters), look to replace power management chips which are now supplied by Dialog Semiconductor.

It was just a few days ago that news broke of Apple ending its licence agreement with British graphic chip-maker Imagination Technologies, causing the latter's stock to plummet. The stat once again brings to light, as to how overly dependent third-party suppliers of Apple are, on the company for their sales and henceforth revenues.

The analyst said Apple could have its own power chips ready by 2019's iPhone line, adding that the company is working on facilities in the USA and Germany.

Apple is using the same tactic with both companies, assuming the Bankhaus Lampe report is right: Hire away the talent you need from a supply partner to make your own version of the same chip.

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.

Apple sells tens of millions of iPhones every year. There are still some analysts who are optimistic about Dialog's future, even as its biggest customer seems ready to pull away. Power management chips handle the amount of voltage and how much charge is supposed to go across the components in the device. This proves yet again how important Apple's iPhone business really is, especially to smaller companies.

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