Apple takes the next step with its leading suppliers, reinforcing the internal chip design

As part of this deal, Apple will transfer to its workforce a group of Dialog engineers who are already supporting the development of the Apple chip, announced Thursday Dialog. Engineers represent around 16% of Dialog's total workforce.

Apple will pay $ 300 million in cash to Dialog, and $ 300 million in advance for the delivery of Dialog products over the next three years, Dialog announced in a statement released Thursday. As part of this agreement, Apple will also assume control of certain Dialog facilities in Italy, Germany and the United Kingdom.

The Dialog business is one of the largest in Apple in terms of acquiring new employees. The purchase of assets and key personnel from start-up companies and suppliers – or the acquisition of entire companies to create in-house promising supply chains or new technologies – is not unusual in the technology sector .

Nevertheless, the Dialog case stands out. The largest acquisition ever made by Apple – a $ 3 billion transaction in 2014 for Beats Electronics – included the addition of about 700 people.

The acquisition of talent comes as the performance of processors designed by Apple for its iPhone exceed the technological advances of batteries commonly used in iPhones, according to experts in chips. The pace of processor development has made power preservation more critical in peripherals.

Apple uses Dialog chips to manage the battery life of its iPhones for years. He has recently added his own semiconductor experts for energy management and has increasingly designed chips that work alongside Dialog's components to optimize power, according to a person familiar with the subject.

The iPhone manufacturer's push into power management chip design has become a core business of Dialog. The company relied on Apple for about 70% to 80% of its business, or about $ 3 per iPhone, until Apple starts developing some of its own management chips. food, according to UBS. Shares of European chip makers fell earlier this year when the company revealed that Apple was adding a second supplier of power management chips.

Dialog said Thursday morning that Apple also had new contracts with the supplier for the development and supply of power management circuits, audio subsystems, charging and others mixed-signal integrated circuits for Apple products.

Revenues from these contracts are expected to start in 2019, before accelerating in 2020 and 2021, the company said. Dialog shares climbed more than 30% during the first European transactions on Thursday.

"Our relationship with Dialog goes back to the first iPhone, and we look forward to continuing this long-standing relationship with them," said Johny Srouji, senior vice president of hardware technology at Apple.

Jalal Bagherli, CEO of Dialog, said the transaction "reaffirmed our longstanding relationship with Apple".

Dialog said it plans to use the proceeds of the transaction to accelerate its investments in growth opportunities, including mergers and acquisitions. The agreement is expected to be concluded in the first half of 2019, Dialog said.

Write to Tripp Mickle at [email protected]