Mubasher: Apple agreed to buy a slice of Dialog Semiconductor’s operations for $600 million, expanding the US tech giant’s chip business in Europe.
Under the deal, the iPhone maker would buy patents, a team of around 300 engineers, some of whom worked already on chips for the US company’s devices, as well as Dialog offices in Germany, the UK, and Italy.
Apple would buy 16% of Dialog’s workforce, while they would remain in Europe and they would report to the company’s hardware technologies division senior vice president Johny Srouji.
Half of the deal’s value, or about $300 million, would be cash for Dialog’s engineers and offices, while the other $300 million would be paid in advance for providing chips during the next three years, both companies stated.
The Berkshire-based company would also supply chips for other customers with a focus on markets, including automobile and internet of things (IoT).
“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’s CEO Jalal Bagherli said.
Apple has utilised Dialog’s power management chips for a decade, when the first iPhones were released, to manage their battery life.
The transaction, which is set to be finalised in the first half of the next year, would promise Apple an expansion of its chip design operations, which grew intense in 2010 when the US firm launched its first customer processor for iPad and iPhone.
Dialog’s revenue for this year would not be impacted, and it would continue to ship existing products to Apple, the chip supplier said.
The announced deal would mollify for now concerns about the future ties between both companies. Dialog’s shares plunged this year after announcing that Apple would have its chips from another manufacturer, widely believed to be the California-headquartered firm itself.
The UK-German chip maker’s shares jumped 17% in pre-market trading in Frankfurt, as the deal would secure its business with Apple for three years ahead.
Moreover, Dialog announced that it would start repurchase for up to 10% of its shares following its next quarterly trading update.