Published in Mobiles

Dialog suffers from its Apple dependence

by on01 June 2018


Sees shares fall as Apple cuts orders


Shares in Dialog Semiconductor fell by 17 percent on Friday to a four year low after the Anglo-German chipmaker said its main customer Apple would cut orders for its power-management chips by around 30 percent this year.

Other European semiconductor stocks in Apple’s smartphone supply chain also suffered on the back of the news. Austria’s Ams AG shed 1.4 percent while STMicroelectronics fell by around 0.4 percent in Paris.

Dialog told investors on Thursday evening that Apple now planned to source the main power-management chips (PMICs) for one of its three new iPhone models from two suppliers instead of just from Dialog.

The reduced order volume would shave five percent off Dialog’s 2018 revenues, although the company said it still expected to achieve year on year growth.

“Apple has opened the Pandora’s box”, said one trader in Frankfurt, adding that this may mark a trend of diminishing sales to Apple that could catch Dialog early in its efforts to diversify away from the US consumer tech giant.

Baader Helvea analyst Guenther Hollfeder said the announcement was a surprise and reflected poor visibility in Dialog’s relationship with Apple, which accounted for 77 percent of group sales in 2017.

Basically, it is never a good idea to lean on one company, particularly one like Apple which tends to prop up its flagging sales by cutting margins and by negotiating hard for cheaper compontents.

Last modified on 01 June 2018
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