Apple Licenses PMIC Technologies & Hires Engineers from Dialog Semiconductorby Anton Shilov on October 11, 2018 4:00 PM EST
Apple and Dialog Semiconductor on Wednesday signed an agreement that will see Apple buy part of their long-term power management IC supplier, while continuing to do regular business with the remaining parts. Under the terms of the deal, Apple will be licensing a number of power management technologies from Dialog, hiring over 300 Dialog employees, and assuming control of several Dialog facilities in Europe. Meanwhile the deal also sets up Apple to be a long-term customer of the remainder of the company, with Dialog contracted to supply hardware through 2021. The two deals will net the semiconductor developer around $600 million in total.
One of the key ways to keep power consumption of modern SoCs in check is by carefully managing their power supply using advanced power management ICs (PMICs). Historically, Apple has been using third-party power management ICs (including those from Dialog), but it looks like the company intends more directly produce and integrate at least some of this technology for future products. Apple has been investing in development of its own semiconductors since 2008, gradually expanding its range of products, IP portfolio, and engineering teams. So the addition of power management IP and developers fits well with Apple’s strategy of moving to in-house developed technologies.
In a bid to enable development of its own PMICs, Apple will pay Dialog $300 million in cash for the parts of the business they are outright acquiring. The money will bring Apple 300 experienced employees, four Dialog facilities in Livorno (Italy), Swindon (U.K.), Nabern and Neuaubing (Germany), as well as an IP license for certain power management technologies. The aforementioned employees have worked closely with Apple for years, so they know requirements of the company.
In fact, Apple reportedly established PMIC development centers in Munich (Germany) and California, which employed 80 engineers as of early-2017. Apple has never formally confirmed this and it is unknown how successful these teams were. In any case, with 300 engineers and three facilities, Apple’s R&D capabilities in this field will get considerably stronger.
Separately, Apple will prepay $300 million for Dialog products that will be delivered starting from 2019 and ramping up in 2020 – 2021. The products in question are PMICs used for power management and charging, chips for audio subsystem, and “other mixed-signal integrated circuits”. Given the fact that Dialog does not say anything about supply agreement beyond 2021, it is not clear whether Apple intends to go fully vertical after this time, or if they simply aren't looking to sign (public) contracts farther out than this.
Dialog says that $600 million from Apple will enable it to invest in development of various mixed-signal solutions for IoT, mobile, automotive, computing, and storage markets. Essentially, the company is looking to hasten their transition to a broader supplier of supporting hardware, allowing them to tap into new and growing markets while diversifying their product portfolio and income streams.
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Source: Dialog Semiconductor
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WatcherCK - Thursday, October 11, 2018 - linkMakes me wonder if, in their eternal efforts to completely integrate their supply chain, Apple dont build their own FAB even if they were just running a single line initially to produce NAND for example, something all of their devices can use... and they could afford to build it outright (and still have a little spare cash in the bank.)
Torrijos - Friday, October 12, 2018 - linkFabs are a commodity that loses value pretty quickly (low margins also), what Apple is trying to do is make sure that any improvement of technologies bought by their R&s $$$ won't end up helping the competition.
It goes for CPUs (their design performance is simply amazing for such a young CPU designer), GPUs (again great performance) and it will probably go to SSD memory etc.
Whether people like it or not Apple is making most of the mobile industry profits, followed by Samsung (in part because they are also a big supplier for Apple).
Apple has decided not to subsidise Samsung, HTC, LG & others High End Android manufacturer by keeping financing designer entities like ARM and Imagination Technology.
Will the performance gap widen quickly enough so it has a true impact on the market and competition ? I think yes but we will see.
Zingam - Friday, October 12, 2018 - linkThe Ultimate Final goal and Solution is for Apple to create the Perfect Customer. The next step would be to buy a genetic engineering company.
mdriftmeyer - Thursday, October 11, 2018 - linkThey didn't just license, but bought the patents and extended their contracts with Dialog, while also hiring 300 employees whose expertise is behind the IP.
Speedfriend - Friday, October 12, 2018 - linkHmm, any deal with Apple usually turns out to be the kiss of death for a smaller supplier...
name99 - Saturday, October 13, 2018 - linkDid you READ the article? The WHOLE POINT of the deal is to try to avoid that for Dialog.
Look, this is not rocket science. Apple is a large customer, and while they start off using generic components, at some point they want to specialize those components. At that point a small supplier has two choices:
- they can accept this reality, that there will be a divergent, Apple, path and work with Apple to minimize their pain and maximize Apple's benefit. Win Win. This is apparently what Dialog did.
- OR they can refuse to accept this reality. We don't know quite what happened with PowerVR, but my guess (based on what I've seen of the CEO's other commercial behavior) is that Apple offered an essentially analogous deal as Dialog, for essentially the same reasons. Difference was Imagination imagined they held all the cards, that they could convert this from a win win to massive windfall for IMG. And if there's one thing anyone should know about Apple, it's that they don't respond well to that sort of commercial threat (hint, Qualcomm..., though it's probably too late for you).
This is, IMHO, not really about Dialog per se, or even Apple per se, it's about attitudes to business. Some (most?) feel business works well when mutually beneficial arrangements are negotiated, but there are a few psychopaths who insist that every deal has to be utterly maximal to their benefit, that any penny left to the other guy is a failure.
Fortunately for Dialog (and, probably for Apple), Dialog was run by sane people, not psychopaths, so a win-win was possible.
I expect similar deals will be negotiated over the next few years with people like Cirrus for audio. Let's hope that the Cirrus management are, likewise, willing to treat negotiations as an opportunity for mutual win.
id4andrei - Friday, October 12, 2018 - linkI'd wager this has more to do with the throttle fiasco Apple suffered. There's a theory that Dialog chips were to blame for it and around that time a rumor circulated that Apple were to drop Dialog. Now it seems they are doing a Google-HTC type deal.