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Apple inks $600M deal to acquire assets and talent from Dialog Semiconductor (techcrunch.com)
133 points by tooltalk 61 days ago | hide | past | web | favorite | 33 comments



Apple taking the application processor business in house has gone very well, they currently have a substantial tech lead in the smart watch market due to their processor advantage over the outdated qualcomm most android devices are stuck with [1]. They have a similar (but smaller) advantage in phones, though that is also due to a very large die size as they can afford to spend more per product.

Presumably they are looking at moving power management silicon in house as well to consolidate that advantage. At there scale, they will be getting custom silicon from Dialog already, but there's probably some comms/cost benefits to dealing with a department rather than an external company.

https://arstechnica.com/gadgets/2018/09/review-googles-wear-...


It sounds a bit like the GT Advanced situation.

Apple starts a relationship with a company, the deal becomes the VAST MAJORITY of the company's revenue, the company wants to get out of the buisness of being an apple supplier, because IF they scale to that size and lose a contract, they have huge cuts to make. So apple comes in, buys a substantial part of the company, and now the company can continue to operate without fear of downsizing. Any downsizing will be apples doing not theirs.


When you get most of your money from one or two sources you aren’t really in control anymore. I can totally appreciate not wanting to be beholden to anyone.

The last consulting firm I worked for had over 70% of their revenue coming from two contracts, and neither contract used any of the tools or philosophies the consulting company claimed to espouse.

Ended up being the case that all the reasons I wanted to work there were just marketing messages and my sense of betrayal soured the relationship.

That the guy in charge of developers left about a year after we parted ways... every time I think about those people I wonder if he knew it was all bullshit or if he just got tired of dealing with attitude from stressed out developers and never understood why they were pushing back.


> The last consulting firm I worked for had over 70% of their revenue coming from two contracts, and neither contract used any of the tools or philosophies the consulting company claimed to espouse.

Assuming you're talking about philosophies that are considered good practice because they lead to more sustainable design practices and smoother development later, I have doubts those ever survive in long-term consulting contracts. The way pressure flows in those scenarios always leads towards emphasizing speed of development. Anything else requires multiple points in the management path both in the local firm and client firm to be willing to forego short term cost for potential long term gains, and if any one of them is out of alignment it causes problems.


If the client is not short-sighted they'll realize that asking to cut corners in the short term results in higher costs in the long term. But if they were this smart they might be doing the development inhouse in the first place. :)


But why wouldn't you pick a cut-rate consulting firm in that case instead of one that claimed to be doing deep work in a number of areas?


The point is not that people don't want to encourage behavior that pays off in the end, it's that it takes alllinks in the chain to be vigilant about it to happen. Anywhere in the line between the the client company's CEO to the consultant company's developer if someone decides to cut corners because of time, cost or some other unknown reason, that will flow down through each subsequent level to the actual developers. There's probably five people in that chain minimum (including the developer, the client CEO, the consultancy CEO, and any managing coordinators), and any one of them can easily change this because of their own pressures. It's an inherently fragile system.


It's a much better situation that what happened to imagination Technologies, when Apple decided to in-source their video acceleration tech on the A-series CPUs. The company's share price dropped 70%.


It was a similar story back in the iPod days as well, Wolfson Microelectronics (coincidentally also a UK firm like Imagination Technologies) suffered similar problems when Apple massively reduced their orders.

> https://www.theguardian.com/business/2008/mar/27/wolfson.app...


See also PA Semi and Intrinsity from a decade back. Important, but small, suppliers who are picked up as asset buys and the talent become an internal team.


Dialog actually tried to get out of Apple dependence but lost their bid for Atmel to Microchip.


> They have a similar (but smaller) advantage in phones, though that is also due to a very large die size as they can afford to spend more per product.

Can Apple afford to spend more per product? There are plenty of other phones in the same price-bracket as the iPhone, and some like the Galaxy S-series phones surely have the volume, to justify a $10–20 increase in SoC cost to get competitive performance.

I expect a larger part of it is there's no justification for Qualcomm to develop such a SoC, because it already gets the sales.


Yes, because Apple has such a dialed-in phone manufacturing operation their gross margins are much higher than Samsung so they have more wiggle room on the core parts. Most estimates have Apple's gross margins on phones to be 1.5x-2x those of Samsung.


>Can Apple afford to spend more per product?

Yeah, Apple has sucked almost all the profit of the Smartphone sector for a long time.

It is just one thing: volume. Their volume is so great and prices so high that they get almost all the profit. Their volume also gives them terrible negotiation power with suppliers, they get the best there it is(like electronics), for cheap. The rest of the companies just fight for the spoils.

https://appleinsider.com/articles/18/04/17/apple-grabs-86-of...

Samsung while being the best in the competition, but is is very far from Apple.


It's interesting that Apple now sells so many devices they're actually suffering from diseconomies of scale. It's hard to get high quality components produced at large scale in a useful timeframe.


They probably pay less per SoC compared to most Android OEM (except maybe Samsung) since they design the chips in house as opposed to paying Qualcomm.


Apple’s magic is scaling a small number of SKUs. Dell has like 180 laptop SKUs. Apple has <30.


Dialog used to sponsor a load of events in my department at uni, no one ever bothered telling us what they actually did, so it was always a bit comical, but now we know.

I think the fact they're only acquiring the relevant part of the company is a fantastic move. It really shows apple is focused on what they're doing and not just buying their way into markets like Cisco or Intel.


The MI band which uses their chip gets great battery life.


I assume this is also heavily influenced by the recent Qualcomm court case where Apple was hit with infringing on one of their power management patents.


This is pure speculation, but I wonder if this has anything to do with the AirPower wireless charging mat's development?


Since the issue with wireless charging is power efficiency, having good power engineers onboard will likely help. That said, they are almost certainly buying them for the PMICs inside hardware devices first, and for accessories like AirPower second.

But it's not a bad way to start shipping advanced power electronics like GaN, which dialog has chips for.


Is AirPower, a fancy induction charger, really important enough to warrant a 600 million dollar investment? I suspect this is more likely iOS device related.


so I guess Apple didn't want to acquire the entire company and all its ~1,900 employees?


For a company worth $1B before the announcement, Apple paid $300M for 16% of their Staff and IP, and $300M for future order. For Dialog that is a much better deal than selling all of itself when Apple has not use for the other 80%.


Relevant snippet from their wiki page:

> Dialog Semiconductor is the exclusive designer of power management integrated circuits (PMICs) for the Apple iPhone, iPad, and Watch, which made up more than 70% of Dialog’s 2016 sales. Its share value halved from April to December 2017 after private bank Bankhaus Lampe changed its outlook for the company from “hold” to “sell” in the belief Apple would replace Dialog’s PMIC designs with its own...

Take the money, get rid of the sword over your head, and keep working on your smart home tech with your new valuations and nobody yelling Frog and expecting you to jump. There are worse ways to run a medium sized company.


Probably, way better than buying them outright and firing the people they don't need.


That would require Apple to acquire the company's liabilities as well. This way it is all up side.


Glad I didn’t go with Dialog for a BLE chip. Kind of puts their line at risk for future development.


They are really great chips for power consumption and price. I have used them in several products and the team behind them really knows what they are doing.


[flagged]


They still list IoT and automotive as areas they are going to continue to develop. Bluetooth is such a large part of their business and fits into these areas, so I fail to see how they would leave that space. My comment is that they actually are very competitive in that area and I would not exclude them from new product development.


This article doesn't lay out which parts of the company are to be retained by Dialog, but I could swear an article I read yesterday listed Bluetooth chips as one of the areas where they would continue to develop their own product.


>Dialog says post the acquisition, the remaining part of the business will focus more on IoT, as well as mobile, automotive, computing and storage markets, specifically as a provider of custom and configurable mixed-signal integrated circuit chips.




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