Analysis: Dialog finds a better way out from under Apple: Page 2 of 3

October 24, 2018 // By Peter Clarke
Analysis: Dialog finds a better way out from under Apple
Jalal Bagherli, the highly-respected CEO of Dialog Semiconductor plc, has negotiated his way out from a potentially company-threatening overexposure to consumer electronics and IT giant Apple Inc.

For many people being a component supplier of ICs to Apple would seem like a dream come true. But Apple, in return for the high volumes of components it buys, squeezes its suppliers hard on price for each subsequent generation of product and, where it can, keeps them dangling with design-ins and design outs.

And when a company is overexposed to a single customer the sudden removal of that customer can cause mayhem for the supplier – as graphics intellectual property licensor Imagination Technologies found to its cost (see Imagination, MIPS to be sold to China-, California-connected VCs).

Dialog itself suffered a couple of share price collapses in 2017 on reports that Apple was working on its own power management ICs (PMICs) that could replace Dialog PMICs in 2019 (see Dialog suffers on report of Apple in-sourcing). In the end Dialog admitted that Apple could design its own PMICs but said that the relationship between the two companies remained unchanged at that time (Dialog admits Apple could make PMICs).

Jalal Bagherli, CEO of Dialog Semiconductor plc

It would now seem that Bagherli was scrambling to find the best way to ameliorate the loss of Apple's business as the consumer continued to pursue an in-sourcing strategy. However, to Bagherli's credit Dialog has bent in the breeze in a way that Imagination didn't.

In Imagination's case the company failed to hear Apple saying it wasn't interested in paying royalties on something it could design itself. In the end Apple went around giving Imagination GPU engineers employment offers (see Apple hires group of UK GPU engineers) and then confirmed publicly that it would eventually be deploying in-house developed GPUs and not paying royalties to Imagination. What followed was the collapse of a UK technology company.

It should be noted that while Imagination ended up getting acquired by a US equity company managing Chinese state funds it now appears to have settled with Apple and thereby avoided potentialpatent disputes (see How much did Apple pay to settle with Imagination?).

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