Apple signs $600m licensing deal with Dialog Semiconductor

11 Oct 2018

An Apple store in Hong Kong. Image: saiko3p/Depositphotos

Apple is buying a portion of chipmaker Dialog Semiconductor’s business.

Since the debut of the earliest iPhone, Apple has been using Dialog Semiconductor power management chips to help manage battery life in its devices.

Today (11 October), Apple announced it is paying $300m in cash to buy a portion of London-headquartered Dialog’s business. As well as the initial outlay, the iPhone maker is also committing a further $300m to make licensing purchases from the remaining segments of Dialog’s business, making it a $600m deal.

Dialog will license certain power management technologies and will transfer some of its assets. It will also move 300 employees to Apple to support chip research and development. Apple is acquiring Dialog offices in Britain, Italy and Germany.

A close relationship

Many of the Dialog staff that are transferring have been working closely with the tech giant for years already. According to Reuters, the patents and people agreement is the largest of its kind by Apple, whose last major acquisition in this space was the $350m purchase of Face ID creator PrimeSense in 2013.

According to Dialog, the deal will not affect its 2018 revenue. It will continue to ship existing power management integrated circuits (PMICs) to Apple. After the deal, it is expected Apple will account for 35pc to 40pc of Dialog’s total revenues in 2022, which will be down from 75pc in the current year. The remaining part of Dialog’s business will focus more on storage, automotive, computing and storage markets, as well as IoT.

Senior vice-president of hardware technologies at Apple, Johny Srouji, said: “Dialog has deep expertise in chip development, and we are thrilled to have this talented group of engineers who’ve long supported our products now working directly for Apple.

Growing demand for chip efficiency

The deal is expected to close in the first half of 2019, pending regulatory approvals. TechCrunch reported that Apple’s growing interest in VR and other hardware products means it needs to focus on power management and chip efficiency in the next few years.

“Our relationship with Dialog goes all the way back to the early iPhones, and we look forward to continuing this longstanding relationship with them.”

CEO of Dialog, Jalal Bagherli, said: “Going forward, we will have a clear strategic focus, building on our custom and configurable mixed-signal IC expertise and world-class power-efficient design. Our execution track record, deep customer relationships and talented employees give us great confidence in our future growth prospects.

“We believe that this transaction is in the best interests of our employees and shareholders, who will benefit from a business with enhanced focus, strong growth prospects and additional financial flexibility to invest in strategic growth initiatives.”

An Apple store in Hong Kong. Image: saiko3p/Depositphotos

Ellen Tannam was a journalist with Silicon Republic, covering all manner of business and tech subjects