A report late last week said that Apple is working on a brand new processor of its own — a power management chip that should improve battery life on future iPhone models. The report claimed that the chip will power iPhones next year or in 2019, quoting different sources familiar with the matter.
Dialog Semiconductor is currently 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. But Dialog’s shares took a severe hit in the process, even as the company tried to reassure investors that it’ll be in business with Apple for at least two years.
Apple is Dialog’s primary source of revenue, accounting for well over 50% of yearly income. But that may change in the future if Apple decides to drop it in favor of its own power management chips.
“Our position remains that we have seen no material change to our ongoing relationship with Apple Inc,” Chief Executive Jalal Bagherli told investors on a conference call, Reuters reports.
But shares still plunged by as much as 19%. Dialog stock has lost more than 40% of its value since April when an analyst warned that Apple was working on its own battery-saving chip.
“Apple has the resources and capability to internally design a PMIC and could potentially do so in the next few years,” the CEO said.
Bagherli said that Apple’s feedback on 2019 products has been “very good” and Dialog will know more come March when new business terms are expected to be signed with Apple for 2019. As for 2018, Dialog said it “does not have reason to believe its current expectations of 2018 Apple business would be impacted,” even if Apple makes its own chips.
Dialog usually doesn’t name business partners when talking to investors, referring to Apple as its “largest customer” or “main business.” But the company said it received a special dispensation from Apple to mention its name this time around.