Apple buys a major European chip supplier in a $ 600 million deal

Apple has signed an agreement with Dialog Semiconductor to license the British chip designer power management technology and acquire certain assets, including more than 300 people.

Apple will pay Dialog (dlgnf) an initial amount of $ 300 million, as well as an additional $ 300 million for product delivery in the coming years. The British firm has also won several new contracts with the iPhone manufacturer, particularly in the areas of power management, audio subsystem, load integrated circuits and mixed-signal, according to a release released Thursday.

Dialog shares climbed 33.6% in Frankfurt on Thursday, their biggest rise since October 2002.

The deal comes nearly a year after Dialog warned investors that Apple (its main customer) could design its own energy management chips in the coming years. Dialog relies on about three-quarters of its revenue from Apple, mainly through the provision of chips that manage the charge and power management of smartphones.

While Apple has been developing its own processors for years, the company has only recently stepped up internal component design, including graphics, Bluetooth, and other phone-related chips. This is expensive and creates new risks, but helps maintain leverage on suppliers after a wave of acquisitions that has reduced the number of chip makers it works with.

Apple has started using its own graphics chips, or GPUs, on the iPhone 8 and the iPhone X. This evolution has continued with the iPhone XS and the Apple Watch Series 4, recently released. iPad and Apple TV, but it is expected that all its products based on iOS will eventually be transferred to its own graphics processors.

As a result of the agreement with Apple, Dialog will focus on businesses such as the Internet of Things, mobile, automotive and IT. Apple's new employees represent approximately 16% of Dialog's total workforce, and the US company will also acquire Dialog's facilities in Italy, the United States, and Germany.

The agreement will not affect Dialog's 2018 revenue and the company will continue to deliver products currently in production to Apple, the company said in its statement. Dialog will also launch a share repurchase program representing up to 10% of the outstanding shares following the update of its third quarter trading activity.