Apple’s vertical integration spree continues

“Apple has long sourced power management IC, or PMIC, products from a small company called Dialog Semiconductor,” Ashraf Eassa writes for The Motley Fool. “This business has been lucrative for Dialog, which indicated in its most recent annual report that about 77% of its sales in 2017 came from Apple.”

“On Oct. 11, Dialog announced that it had signed a licensing agreement with Apple related to PMIC technology,” Eassa writes. “Dialog says it’ll get $300 million ‘in cash for the license of certain PMIC technologies and the transfer of certain PMIC assets and employees, payable upon closing.’ The company revealed that “over 300 employees — representing 16% of Dialog’s global workforce” will move over to Apple. Apple will also take over ‘certain Dialog facilities in Livorno, Swindon, Nabern and Neuaubing.’ On top of that, Dialog added that Apple is going to prepay $300 million ‘for products to be delivered over the next three years.'”

“In other words, Apple has designed Dialog out of the main PMIC spots in its iPhone, iPad, and Apple Watch products over the long term. That’s certainly going to lead to a reduction in Dialog’s revenue,” Eassa writes. “With that said, Dialog indicated that it ‘expects to continue shipping current and future generations of sub-PMICs for all platforms to Apple.'”

Read more in the full article here.

MacDailyNews Take: Unsurprisingly, this is Apple doing what Apple does:

I’ve always wanted to own and control the primary technology in everything we do.Steve Jobs, October 12, 2004

• In order to build the best products, you have to own the primary technologies. Steve felt that if Apple could do that — make great products and great tools for people — they in turn would do great things. He felt strongly that this would be his contribution to the world at large. We still very much believe that. That’s still the core of this company.Apple CEO Tim Cook, March 18, 2015

SEE ALSO:
Apple, Dialog Semi ink $600 million licensing deal for key iPhone tech – October 11, 2018
Dialog Semi sinks 17 percent after warning Apple will bifurcate iPhone power-management chip orders – June 1, 2018
Shares in chipmaker Dialog plunge over Apple contract doubts – April 11, 2017
Apple supplier Dialog partners with wireless charging company Energous – December 15, 2016

4 Comments

    1. Apparently, the iPhone takes up most of Apple’s R&D efforts and the desktops don’t matter much to Apple in terms of revenue and profits. I feel certain Apple could sell more desktops and laptops if they really wanted to. I personally don’t think Apple wants to. MacOS devices seems to be some sort of small side business for Apple. I’d like to compare profitability of iPhones to Mac desktops. I bet there’s a huge difference.

      iPhones will likely be replaced at least every two to three years while a desktop or laptop will probably last users for five years (that’s my case). So you see where I’m going? Apple is always going to go for selling products that get replaced the soonest. An an Apple shareholder, I shouldn’t complain but I would still prefer Apple to put as much effort into their MacOS products as they do with iPhones or AppleWatches.

  1. Problem is, when Tim Cook (not Jobs) talks about “primary technologies”, he is misguided and has the only iOS gadget in his mind. He is just securing his “supply chain” to get a peace of his insecure mind. Jobs was talking much broader subject.

Leave a Reply to KenT Cancel reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.