Apple to buy part of supplier Dialog’s business in $600 million deal

Business

BERLIN/SAN FRANCISCO (Reuters) – Apple Inc has agreed to buy a portion of chip supplier Dialog Semiconductor Plc’s business in a $600 million deal, the two companies said Thursday, expanding the iPhone maker’s chip operations in Europe.

A customer stands underneath an illuminated Apple logo as he looks out the window of the Apple store located in central Sydney, Australia, May 28, 2018. REUTERS/David Gray

Since the first iPhones a decade ago, Apple has used Dialog power management chips to help its devices manage battery life. Under the deal, Apple is buying patents, a team of about 300 engineers, most of whom already worked on chips for Apple devices, and Dialog offices in Britain, Italy and Germany.

Dialog said its 2018 revenue would not be affected and it would continue shipments of products in production to Apple.

For now, the deal settles questions about future relations between Apple and Dialog, whose shares tumbled this year when it said Apple planned to use chips from another supplier, which was widely believed to be Apple itself.

Half of the deal’s value, or about $300 million, is cash for the Dialog engineers and offices and the other $300 million is pre-payment to Dialog for supplying chips over the next three years, the companies said.

Dialog semiconductor logo is pictured at a company building in Germering near Munich, Germany August 15, 2016. REUTERS/Michaela Rehle

Dialog said in a statement it would continue to deliver chips to other customers, focusing on the automotive and internet-of-things markets, among others.

“This transaction reaffirms our long-standing relationship with Apple, and demonstrates the value of the strong business and technologies we have built at Dialog,” Dialog CEO Jalal Bagherli said in the statement.

The deal represents an expansion of Apple’s chip design operations, which kicked into high gear in 2010 when the company released its first custom processor for the iPad and iPhone.

Apple is buying about 16 percent of Dialog’s workforce. Apple said the acquired employees would stay in Europe and would report to Johny Srouji, the company’s senior vice president of hardware technologies who oversees Apple’s chip design efforts.

Apple already has a chip design centers in Munich, Germany and St Albans, Britain. The deal will see Apple acquire four more from Dialog, in Livorno in Italy, Swindon in Britain, and Nabern and Neuaubing in Germany.

Dialog said Qatalyst Partners was acting as financial adviser and Linklaters was acting as its legal counsel.

Reporting by Caroline Copley in Berlin and Stephen Nellis in San Francisco; Editing by Riham Alkousaa and Edmund Blair

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