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Apple may not need this supplier. Its stock crashes 23%

05 December 2017
Apple may not need this supplier. Its stock crashes 23%

CEO Jalal Bagherli said the company's position is that there is no material change to its current ongoing relations with iPhone maker Apple.

Dialog Semiconductor is now the only supplier of power management chips for the iPhone, and the company on Monday confirmed that Apple does indeed have the capability of designing its own silicon to handle various power-related aspects on iPhones. Oddo Bhf set a €50.00 ($59.52) target price on Dialog Semiconductor and gave the company a buy rating in a research report on Friday, October 6th. The rumor published that day noted that Apple was designing its own main power management chips for use in iPhones as early as in 2018, cutting dependence on Dialog Semiconductor. Apple accounted for74% of Dialog's sales in 2016, according to the company's annual report.

The company admitted that "Apple has the resources and capability to internally design" its own chip and "could potentially do so in the next few years".

"Apple is obviously not helping Dialog to win this argument with investors".

Semiconductor suppliers are typically barred by Apple from revealing their supply relationships.

Dialog shares were down 18.5 percent to 25.45 euros at 1150 GMT on December 4.

"The shares appear to have instantly priced that Apple will design out Dialog partly or almost completely", Morgan Stanley said in a note to investors.

Dialog said it had no information to suggest Apple was getting ready to start making its own chips that soon.

Bagherli said the feedback from Apple thus far relative to his product plans for 2019 has been very good and he expected much more clarity on the issue by March relative to terms of the new business for 2019 with Apple. Dialog would update investors when it had more details, he said.

Another company, Imagination Technologies, saw its stock drop more than 70% in April, after Apple said it was planning to stop licensing the firm's technology in about two years.