According to a report by Reuters, Dialog Semiconductor’s shares saw a massive 23% drop today after it acknowledged that Apple, its top customer, is developing its own power chips used in iPhones. The UK-based manufacturer however said that there was no risk to its existing supply deals in 2018 and it was in the advanced stages of working with Apple on designing “2019-type products”.
The stock has lost half its value since April on investor concerns that Apple is working on its own power chips. Analysts reckon Dialog derives more than half its revenue from supplying Apple with power management integrated circuits (PMICs).
“Our position remains that we have seen no material change to our ongoing relationship with Apple Inc,” Chief Executive Jalal Bagherli told investors on a conference call. However, the Anglo-German chipmaker conceded: “Apple has the resources and capability to internally design a PMIC and could potentially do so in the next few years.”
Last week, a separate report by The Nikkei Business Daily claimed that Apple would make about half the iPhone’s power-management chips starting next year, with another source saying this could be delayed to 2019. As always, investors remain wary of companies that rely heavily on Apple, which has cut out several small suppliers in the past.
In the past, Apple has barred semiconductor suppliers from revealing their supply relationships. However, Dialog revealed that it had received a special dispensation from Apple to mention it.
Earlier this year, Apple announced that it planned to replace graphics chip supplier Imagination Technologies, sending its shares down 70% in a single session. The company was subsequently sold off in two separate deals.