Enterprise Television – Apple Inks Deal with European Chipmaker, Dialog Semiconductor
Dialog Semiconductor has struck a $600 million deal with Apple, cementing the relationship between the European chipmaker.
The deal will see Apple pay Dialog $300 million in cash upfront to license some of the Frankfurt-listed group’s power management technologies, as well as for the transfer of some of Dialog’s assets and 16 per cent of its workforce.
Dialog will also receive $300 million as a pre-payment for products to be delivered over the next three years. Shares in the group jumped more than 30 per cent after the news on Thursday morning.
In June, Dialog’s share price dived after it confirmed Apple was planning to develop its own power management chips for iPhones.
On Thursday, however, Dialog said it had been awarded “a broad range of new contracts from Apple for the development and supply of power management, audio subsystem, charging and other mixed-signal integrated circuits”, with revenue from the new contracts due to start flowing in from 2019 and picking up in 2020 and 2021.
“This transaction reaffirms our longstanding relationship with Apple, and demonstrates the value of the strong business and technologies we have built at Dialog,” said chief executive Jalal Bagherli.
“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.”
Revenues for the current financial year would not be affected, but money from the deal would help the company strengthen its balance sheet and launch a buyback of up to 10 per cent of its shares after its third-quarter update, Dialog said.
Apple will employ more than 300 Dialog engineers and other employees who already work on chip development for the Cupertino-based company.
The deal will see Apple take on Dialog facilities in Livorno, Italy, Swindon in the UK and Nabern and Neuaubing in Germany.