Apple has quietly been putting considerable effort into building faster and more efficient chips that can help differentiate its hardware from the rest of the consumer electronics pack, and today it’s taking its next (and possibly biggest) step in that strategy. Apple is paying $300 million in cash to purchase a portion of Dialog Semiconductor, a chipmaker based out of Europe that it has been working with since the first iPhone. On top of the main acquisition, Apple is also committing $300 million to make further purchases from the remaining part of Dialog’s business.
This will be Apple’s biggest acquisition by far in terms of people: 300 people will be joining Apple as part of the deal, or about 16 percent of Dialog’s total workforce. From what we understand, those who are joining have already been working tightly with Apple up to now. The teams joining are based across Livorno in Italy, Swindon in England, and Nabern and Neuaubing in Germany, near Munich, where Apple already has an operation.
In some cases, Apple will be taking over entire buildings that had been owned by Dialog, and in others they will be colocating in buildings where Dialog will continue to develop its own business (another sign of how closely the two have and will continue to work together). The Dialog employees Apple is picking up in this acquisition will report to Apple’s SVP of hardware technologies, Johny Srouji.
“Dialog has deep expertise in chip development, and we are thrilled to have this talented group of engineers who’ve long supported our products now working directly for Apple,” said Srouji, in a statement. “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’s acquisition will also include IP and licenses for further IP, we understand.
The deal — which is expected to close in the first half of 2019, pending regulatory approvals — comes at a time when many expect Apple to release a VR headset in the future, and while our sources haven’t told us specifically about this, what we do know is that one big, more general focus for the company is to continue working on power management and chips that are more efficient in that regard, particularly considering the newest devices that Apple has added to its range: AirPods headphones and the Watch — wireless, high-performing hardware.
It also comes at a time when Apple has been in the spotlight for another kind of chip story: the company was named in a controversial Bloomberg report alleging that there have been “spy chips” secretly implanted on Apple hardware by way of Supermicro motherboards — a report that Apple and others have strongly denied. This could shift the focus on what people are talking about when they think of Apple and chips, although I have a feeling that earlier story could see some more developments before it goes away.
“This transaction reaffirms our long-standing relationship with Apple, and demonstrates the value of the strong business and technologies we have built at Dialog,” said Jalal Bagherli, CEO of Dialog, in a statement. “Going forward, we will have a clear strategic focus, building on our custom and configurable mixed-signal IC expertise and world-class power-efficient design. Our execution track record, deep customer relationships, and talented employees give us great confidence in our future growth prospects… We believe that this transaction is in the best interests of our employees and shareholders who will benefit from a business with enhanced focus, strong growth prospects and additional financial flexibility to invest in strategic growth initiatives.”
Dialog is holding a conference call later this morning to talk more about the deal and we will update this story as we learn more.
More to come.