Listen to this article
Shares in Dialog Semiconductor dropped more than a third on Tuesday morning, amid fears the Anglo-German chipmaker may lose its key contracts supplying Apple.
Analysts at Bankhaus Lampe downgraded their rating on the company, suggesting that Apple may be planning to develop an in-house replacement for Dialog’s power management chips.
The researchers said they had “strong evidence that Apple is developing its own and intends to replace the chip made by Dialog at least in part”.
Dialog relies on Apple for almost three quarters of its revenues but the US tech group has been increasingly moving to own more of the core technologies at the heart of its products.
Shares in the German-listed Dialog dropped as much as 34 per cent in early trading, and at publication time were down 28.8 per cent at €34.
The worries follow news last week that Apple plans to stop using technology developed by fellow British chipmaker Imagination Technologies. Shares in the group sank more than 60 per cent on the news.
Gene Munster, a longtime Apple analyst, told the Financial Times that investing in Apple suppliers was akin to playing “Russian roulette”. “It’s the classic deal with the devil,” he says. “You know you are going to pay a price for it, whether it is getting left behind completely or squeezed on your profits.”
Apple and Dialog did not respond to request for comment.
Read more from the FT’s Tim Bradshaw: The Blessing and Curse of Being an Apple Supplier