Apple Supplier Shares Plunge over In-House Power-Management Chips

An Apple supplier’s shares plunged Tuesday after an analyst warned that the company is likely to develop its own in-house chip.

Dialog Semiconductor, a UK company that makes power-management chips for Apple, saw its worst stock plunge in more than 16 years after Karsten Iltgen, a Bankhaus Lampe analyst, published a research note on Tuesday that warned of the change. Cupertino makes up for a lion’s share of Dialog’s sales, about 74 percent. Following the publication of that note, the company’s shares tumbled down 36 percent at one point on the Frankfurt Stock Exchange, Bloomberg reported.

“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,” Iltgen wrote in the research note. He added that Apple is unlikely to make the switch in the near future. Dialog, for their part, announced that they weren’t aware of any reason for the share plunge.

Apple is reportedly working on establishing facilities dedicated to designing power-management chips in Munich and California. Iltgen estimates that about 80 Apple engineers are already working toward creating a custom power-management chipset — which could see use in flagship iPhone devices as soon as 2019. And according to a source familiar with the matter, there might have been warning signs — as Apple has reportedly been hiring a steady stream of Dialog employees within the last year.

Cupertino has recently moved toward supply self-reliance, and is increasingly putting its focus on designing its own proprietary chip technology. Last week, Apple announced to supplier Imagination Technologies that it would no longer use the company’s graphics processors within the next two years — instead opting for its own in-house chip. Imagination’s shares similarly plunged after the announcement — as Apple makes up about half of the British company’s revenues.