Apple will pay $600M in total, $300M in cash and $300M for future products, to Dialog, which has supported Apple since the original iPhone.
With this agreement, both sides win, as Apple gains access to critical power management technology and Dialog buys time to transform its business to serve a broader customer base.
What Does The Licensing Deal Include?
The $600M deal includes the core licensing agreement, an asset transfer, and a suite of new contracts.
Dialog has agreed to license a specific set of power management technologies to Apple which has been exploring ways to reduce manufacturing costs. This agreement comes as a surprise to some as sources reported late last year that Apple was looking to move away from Dialog and design its own power management chips in-house. Others disclosed of a secret lab in Oregon where engineers were focused on increasing Apple’s manufacturing capability which would help the company prepare for the next generation of iPhones and other future products.
The decision to re-up with Dialog puts the longstanding semiconductor company in a good position to transform and diversify its business so that it is not as heavily dependent on the revenue from Apple going forward.
Apple will also acquire 300 engineers from Dialog, 16% of the company’s workforce, who are located across European offices and have prior experience working with their new employer. Finally, the deal also includes many new contracts awarded by Apple to Dialog for future mixed-signal integrated circuit technology.
What Does This Partnership Mean For The Microchip Industry?
Microchips are an essential component of integrated circuits (ICs) which power so much of our modern electronics today. As technology continues to improve and reach new populations across the globe, the demand for high-quality mixed signal ICs will remain high, especially those geared towards effective power management.
The power management market is expected to reach $40B by next year and will see a lot of investment from tech giants, like Apple, that produce mobile electronics requiring long battery life.
The deal also highlights the need for semiconductor manufacturers to broaden the scope of their offerings in order to stay competitive in today’s age. Apple took a serious look at bringing manufacturing in-house in order to cut costs within its aggressive production goals, thereby threatening Dialog’s business. Now, the UK-based company plans to strategically expand its scope and investigate other potential opportunities within the Internet of things.
What Do You Think?
Apple’s $600M investment in Dialog is its biggest ever, revealing how vital microchip technology is to the company’s current and future operating model.
What are other implications of this partnership?
What else does it reveal about global innovators?
Let us know your thoughts below!