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Apple inks $600M deal to license IP, acquire assets and talent from Dialog to expand chipmaking in Europe


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 its taking its next (and possibly largest) step in that strategy. Apple is paying $300 million in cash to buy 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 $300 million portion of the deal, Apple is also committing a further $300 million to make purchases from the remaining part of Dialogs business, making it a $600 million deal in total. While Dialog is describing this as an asset transfer and licensing deal, it will be Apples biggest acquisition by far in terms of people: 300 people will be joining Apple as part of it, or about 16 percent of Dialogs 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 Apples SVP of hardware technologies, Johny Srouji.  Dialog has deep expertise in chip development, and we are thrilled to have this talented group of engineers whove 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. Apples payment also includes 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 havent 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. In September, at the same time that it announced its latest generation of iPhone devices, Apple announced a new chip of its own design, the A12 Bionic. Apple claims the A12 Bionic is the industrys first 7nm chip (although as weve said before different companies measure these differently). With 6.96 billion transistors, the A12 Bionic features a 6-core CPU and a 4-Core GPU, along with Apples Neural Engine for running machine learning workloads. The chips two high-performance cores and four efficiency cores, with the high-performance cores up to 15 percent faster and 40 percent more power efficient than previous chips, and the efficiency cores using up to 50 percent less power. Apple also says that the Neural Engine is capable processing 5 trillion operations per second, up from 600 billion for its predecessor, the A11. 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. 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. Interestingly, you might recall that Apple once eyed up buying another chipmaker acquisition in Europe, Imagination Technologies, which had been a close partner of the company. That deal ultimately did not come to pass, Apple started work on its own graphics chips, and more recently has even been in some disputes with Imagination. 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 and that hasnt been corroborated so far. This should shift the focus on what people are talking about when they think of Apple and chips. 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.

Apple bets $600 million on improving Apple Watch, iPhone battery life


Apple's relationship with Dialog goes back many years, to the early iPhone days. Apple struck a huge deal that will push its chip-making ambitions forward. The tech giant agreed to pay $600 million in total to Dialog Semiconductor, a UK-based chipmaker that has been working with Apple since the first iPhones came out. That large amount of money will go toward two things: $300 million in cash pays for a portion of Dialog's company, including licensing power-management technologies, assets, and more than 300 employees who will now work for Apple. The company will pay the remaining $300 million to Dialog in advance for products to come out within the next three years. "Dialog has deep expertise in chip development, and we are thrilled to have this talented group of engineers whove long supported our products now working directly for Apple," Johny Srouji, Apples senior vice president of Hardware Technologies, said 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. The 300 Dialog engineers who will now be Apple employees have reportedly already been working closely with the company. Those folks will continue to work out of offices across Europe as Apple takes over some Dialog facilities in Italy, Germany, and the UK. Apple's acquisition of Dialog points to the company's seriousness in making its own chips, particularly for power management. Apple already makes chips found in its iPhones and iPads, but taking on more of the manufacturing process could help the company cut costs. Also, more efficient power-management chips could improve Apple devices like AirPods and the Apple Watch. While battery life is a big concern for all Apple devices, it's more pronounced in accessories like the wireless earbuds and the Watch, both of which are designed to work either all day or for multiple days at a time. With Dialog's technology and IP, Apple will likely be able to develop a better power-management chip than it could have on its own. After the acquisition, the remainder of Dialog's company will focus on the IoT, automotive, and computing and storage markets. The deal is expected to be finalized in early 2019, pending regulatory approval.