The unconfirmed news was revealed in a research note from a Bankhaus Lampe analyst, passed to Bloomberg today. Apple will allegedly cut its ties with Dialog Semiconductor as it forges its own path for future iPhone power management chips, creating its own design in a bid to maximise the efficiency of future handsets.
While unofficial, the report has sent shares in Dialog Semiconductor plummeting. It follows Apple’s decision to build its own iPhone graphics processors in a decision which has crippled another UK company, Imagination Technologies.
Investors in Dialog were quick to recall Imagination’s press release from just last week, sending shares crashing down 36 percent today. It’s the company’s biggest fall in 16 years. Dialog is reliant on Apple’s custom as almost 75 percent of its sales are to the Californian tech company.
Apple is said to be developing the new chip in its research facilities in California and Munich. The Power Management Integrated Circuit (PMIC) will be used to improve the power delivery, transfer and efficiency of iPhone models from 2019 onwards. Development is likely to be heading towards completion late next year.
The team working on the project currently numbers around 80. Many team members are said to have been drafted in from Dialog over the past year, although the companies have previously transferred staff members due to their close collaboration. The reports appear to echo the news from Imagination though, creating a similar pattern. Apple hired several Imagination employees before news broke of the company’s plans to sever ties with the firm.
Coupled with Apple’s now public plans to build its own GPUs, today’s reports of power management chips also moving in house are credible. Apple is trying to reduce its external dependencies, minimising its reliance on suppliers by bringing the design of key components home to its research facilities. It’s thought the overarching aim is to create more competitive products using unique silicon that won’t be found in rival products.
Since battery life and durability remain common complaints with the iPhone, it makes commercial sense for Apple to attempt improvements in this area. The company risks regressions in performance during the first few iterations of its product while its team acquires experience. However, Apple is no stranger to custom silicon as it has designed its own A-series iPhone and iPad processors for many generations.
There are still some analysts who are optimistic about Dialog’s future, even as its biggest customer seems ready to pull away. A research note issued by Barclays today notes that Apple’s 80-strong team pales in comparison with the 1,300 staff working at Dialog. As with Imagination, Dialog also holds intellectual property rights that Apple may be unable to avoid infringing on, forcing it into royalty arrangements even if it does build its own chips.
