Dialog Semiconductor shares tumble after ‘Apple warning’

Bloomberg

Dialog Semiconductor Plc’s shares plunged the most in more than 16 years after an analyst warned that Apple Inc. probably will cut back on the use of the company’s power-management chips.
“There is strong evidence that Apple is developing its own power-management integrated circuits and intends to replace the chip made by Dialog at least in part,” Karsten Iltgen, analyst at Bankhaus Lampe, said in a research note published Tuesday. A shift to Apple developing its own chips in-house is unlikely in the short term, he said.
Dialog’s stock sank 20 percent to 38.26 euros at 12:05 p.m. in Frankfurt, giving the company a market value of 2.98 billion euros ($3.2 billion). It earlier dropped as much as 36 percent, the biggest intraday decline since Dec. 18, 2000.
Suppliers of Apple have been hit recently. Last week, Apple notified Imagination Technologies Group Plc that it will no longer be using the British company’s graphics technology within the next two years. The news sent Imagination’s shares down 62 percent on April 3. Apple is Imagination’s largest customer, providing just over half its revenue.
Apple also dominates Dialog’s supply chain. Reading, England-based Dialog gets about 74 percent of its sales from Apple. “We believe that Apple is setting up power-management design centers in Munich and California,” said Iltgen. “We hear from the industry that about 80 engineers at Apple are already working on a PMIC with specific plans to employ it in the iPhone by as early as 2019.” Bankhaus Lampe downgraded Dialog to a sell rating from hold. Spokespeople from Dialog and Apple didn’t respond to requests for comment. Dialog, which supplies chips to Apple’s iPhones and iPads, employs about 1,300 engineers, predominately in the UK
Apple has been busy taking in-house development work for its graphic processing units.