SAN FRANCISCO/FRANKFURT: Apple Inc is buying the power-management technology at the heart of its iPhones in a $600 million deal with Dialog Semiconductor that also secures the German-listed company’s role as a supplier to the U.S. tech giant.
The agreement to acquire patents and people from the Anglo-German chip designer is not only unusual, but also the largest of its kind by Apple, whose last sizable acquisition was the $350 million purchase of Face ID creator Prime Sense in 2013.
Dialog shares surged as much as 34 percent on Thursday, their most since 2002, as the deal bought the company time to reduce its dependence on Apple – which it expects to account for three-quarters of this year’s sales.
Dialog’s shares had tumbled earlier this year when it said Apple planned to use chips from another supplier.
Dialog Chief Executive Jalal Bagherli told Reuters he could now lead a “managed, smooth” transformation of the business as Dialog seeks new opportunities in areas such as the Internet of Things that includes connected devices like home speakers, fitness trackers or smart watches.
Since the first iPhones a decade ago, Apple has used Dialog power-management chips to extend their battery life. Under the deal, Apple is buying patents, a 300-strong engineering team, most of whom already worked on chips for Apple devices, and Dialog offices in Britain, Italy and Germany.
Dialog said its 2018 revenue would not be affected and it would continue shipments of existing main power management integrated circuits (PMICs) to Apple. It expects to sell current and future generations of so-called sub-PMICs to Apple.
Bagherli said that Apple increasingly viewed main PMICs, which are central to the operation of its devices, as a strategic element that it wanted to control directly. This was not the case for sub-PMICs that manage features such as on-board cameras, he told Reuters.–Reuters