Apple Inc. has acquired a controlling interest in the technology at the heart of iPhone's power management. In a $600 million deal with German Dialog Semiconductors, Apple will gain a license for technology as well as bring on a number of people from the semiconductor company. Some analysts say that Apple represented 75% of Dialog's business, so it is not surprising to see the Cupertino behemoth pursue this new relationship.
CEO Jalal Bagherli told Reuters that he looks forward to leading a "managed, smooth" transition of the business to new opportunities such as wearable technology and the Internet of Things space. Bagherli explained that Apple sees strategic value in power management integrated circuits (PMICs), but that the sub-PMICs that manage other on-board features such as cameras will still be bought directly from Dialog. Apple's Senior VP of Hardware Technologies Johny Srouji added, “Our relationship with Dialog goes all the way back to the early iPhones, and we look forward to continuing this long-standing relationship with them.”
Apple (AAPL) is acquihiring slightly less than one fifth of Dialog Semiconductors' team in this deal. $300 million of the deal goes towards this talent acquisition with the remaining $300 million being accounted for a pre-payment to Dialog for a three year long chip supply agreement. The transaction is expected to be completed by the first half of 2019. After the deal, Dialog expects revenues from Apple to comprise 35% of their total sales by the 2022.
Apple currently carries a "buy" recommendation in our Game Trader video game and tech stock ratings and has been hit with the rest of the market in this ongoing correction. It is great to see the company use its cash for something other than share buybacks and dividends, as this deal with Dialog will undoubtedly help the company bring some costs of iPhone production in-house while beefing up their already impressive internal semiconductor team. With more money than they know what to do with, it seems likely that Apple will keep making strategic investments when they see fit.