Shares of the Anglo-German technology manufacturer Dialog Semiconductor fell by roughly 20 points on Tuesday morning following a warning from a financial analyst who said the company could potentially lose its contract with US tech giant Apple.
Private German bank, Bankhaus Lampe, downgraded the company to a sell rating based on what has been called “strong evidence” that Apple is working on its own new battery-saving microchip for their proprietary iPhone, a chip which could, then, replace Dialog’s circuits within, perhaps, the next two years.
Bankhaus Lampe analyst, Karsten Iltgen authored the research note, saying, “I’m certainly not enjoying the sell-off in the stock this morning. I just thought it was my duty really to publish what I found in my research.”
He goes on to say, “It could be quite alarming for the company in the medium term, at least,” in regards to Apple’s move towards developing these power management integrated circuits, in house. “I’m describing in the note that from 2019 onwwards, this could have a significant impact on earnings.”
Iltgen also comments that Apple has been setting up power management design centers across both Munich and California, noting that speculation within the industry suggests as many as 80 engineers at Apple could be already working on the power management integrated circuits in preparation for a 2019 launch.
On the other hand, neither Morgan Stanley nor Bank of America-Merill Lynch are sold on the fact that the reason for Apple’s hiring spree has anything, necessarily, to do with PMIC. In fact, analysts with BoA-Merrill Lynch suggest that the recent surge in engineers at Apple might simply be explained by a need to develop any of another handful of different products.
Regardless of Apple’s strategy, shares of Dialog sank 36 percent at market open. The stock recovered, slightly, to rebound more than 16 percent—to reach 7.79 EU—by afternoon, Frankfurt timeThe company’s stock sank 36 percent at the start of trading. At 14:30 Frankfurt time, Dialog was down more than 16 percent to 7.79 euros.
More evidence that Apple could be moving towards fewer external partnerships comes from a revelation at Imagination Technologies. Last week, the firm revealed that Apple was planning to replace their graphics chips with in-house parts. And with that news, Imagination’s stock plummeted by roughly 70 percent.