Apple cuts smartphone power chip orders from Dialog Semiconductor

FRANKFURT (Reuters) - Dialog Semiconductor said Apple now planned to source the main power management chips (PMICs) for one of its three new iPhone models from two suppliers instead of just from the German chipmaker.

FILE PHOTO: Dialog semiconductor logo is pictured at a company building in Germering near Munich, Germany August 15, 2016. REUTERS/Michaela Rehle

That means that Apple will order 30 percent fewer of the chips from Dialog this year than it had initially expected, Dialog said in a statement on Thursday.

The news sent its shares 3.9 percent lower in late Frankfurt trade. Dialog’s stock has lost more than half of its value over the past year on investor concerns that Apple is working on its own battery-saving chips for iPhones.

Analysts reckon Dialog derives more than half its revenue from supplying Apple with PMICs.

The reduced order volume for the PMICs will shave 5 percent off the chipmaker’s 2018 revenues, but Dialog said it still expected its 2018 revenues to grow year-on-year.

The impact on 2019 revenues is likely to be similar, Chief Executive Jalal Bagherli told analysts on a conference call.

He said Apple had not provided a reason for the change in its sourcing of chips.

“If you think about the fact that we are qualified for all three phones, that means there is no performance-related issue. It might be a statement of intent to reduce risk on having one supplier and have an alternative source,” he said.

He also said Apple had not told him who the second, new supplier of the main PMICs was but said he saw it as very likely that it was an in-house source at Apple.

Apple did not change the projected order volume for the other power management chip that Dialog is supplying for the new iPhone models - the sub-PMIC - nor for all other PMICs, including those for tablets, wearables and notebooks.

Dialog said it would continue to explore new mixed-signal opportunities outside of power management for future Apple products.

Reporting by Maria Sheahan; Editing by Adrian Croft and Alexandra Hudson

Tech

TSMC's smartphone warning points squarely at Apple: analysts

(Reuters) - Shares in Apple Inc (AAPL.O) and its suppliers fell on Thursday after a raft of analysts read a prediction of softer smartphone sales from Taiwan Semiconductor Manufacturing Co Ltd (2330.TW) as driven chiefly by concern about demand for iPhones.

FILE PHOTO: A logo of Taiwan Semiconductor Manufacturing Co (TSMC) is seen at its headquarters in Hsinchu, Taiwan October 5, 2017. REUTERS/Eason Lam/File Photo

TSMC, the world’s largest contract chipmaker and a major Apple supplier, revised its full-year revenue target to the low end of its earlier forecast.

“Apple represents nearly 20 percent of TSMC’s revenue so the outlook potentially points to weaker-than-anticipated iPhone demand,” Atlantic Equities analyst James Cordwell told Reuters.

Others, some asking not to be quoted, said baldly that the warning was “exactly” about Apple.

Mizuho Securities USA said in a client note that its checks continue to point to soft demand for iPhone X, the Cupertino-based firm’s tenth anniversary phone released last November, in addition to a steady fall in iPhone 8 and 8 Plus orders.

Apple’s shares were last down 2.5 percent and were the biggest drag on the tech-heavy Nasdaq index.

Shares of Apple suppliers including Qualcomm Inc (QCOM.O), Intel Corp (INTC.O), Qorvo Inc (QRVO.O), Skyworks Solutions Inc (SWKS.O) and Broadcom Inc (AVGO.O) fell by 2 percent to 5 percent.

“Until the new iPhones in the Fall start driving the production food chain in Q3, mobile’s going to be weak,” Elazar Advisors analyst Chaim Siegel said.

TSMC, also a supplier to Qualcomm and Nvidia Corp (NVDA.O), said it expects growth this year of 5 percent for the global semiconductor industry, weaker than an earlier forecast of 5-7 percent.

Data provider TrendForce had earlier estimated 2018 global smartphone production at around 1.5 billion units, 2.8 percent up on 2017 but down from a previously expected 5 percent.

TSMC on Thursday estimated 8 percent growth for contract chipmakers, compared with its previous forecast of 9-10 percent.

U.S.-listed shares of TSMC (TSM.N) were down 6 percent, while other chip equipment makers such as Applied Materials Inc (AMAT.O) and Lam Research Corp (LRCX.O) fell about 5 percent and ASML Holding NV (ASML.O) lost 3.6 percent.

Another big industry bellwether, chip equipment maker Lam Research, said on Wednesday its shipments missed consensus estimates for the first time in five years.

Chipmakers Analog Devices Inc (ADI.O), Micron Technology (MU.O) and Xilinx Inc (XLNX.O) were also down by 3 percent to 4 percent.

Reporting by Sonam Rai in Bengaluru; Editing by Maju Samuel and Patrick Graham

Tech