While the move by Apple brings more of its supply chain under its own control, the deal also involved a pre-payment for a range of Dialog components up to 2021.
Good news for a company that at the end of last year saw its share price tumble on the back of rumours that Apple was seeking an alternative supplier for the power management chips it was sourcing from Dialog - teardowns suggested that Apple was already beginning to use its own designs in place of a Dialog chip.
With three-quarters of its revenues coming from Apple, this move significantly reduces Dialog’s dependency going forward.
There were concerns that Dialog would lose all its Apple business, but with this cash deal along with orders up until 2021, it is now much better placed to fund new business opportunities.
For Apple, it gets its hands on a design team that was, essentially, already working for it and saves it from having to develop its own engineering team.
In a deal that works out at $1million per engineer, it appears both companies have come away with something they can be pleased with and, perhaps, it was the best Dialog could have hoped for.
