A computer chip developed and designed by NASA. NASA

Apple Could Design Its Chips In-House by Next Year

The Japanese Nikkei said that, based on Apple’s current plan, the company would replace potentially as much as half of the power management chips that go into the iPhones with its own design.

Apple Inc. is designing its own power-management chips for use in iPhones from as early as 2018, reducing its dependence on Dialog Semiconductor Plc, Japan’s Nikkei reported, citing unidentified sources. The report sent Dialog plunging the most in almost eight months.

Such chips handle charging and power-management functions in smartphones, and U.K.-based Dialog relies on Apple for about three-quarters of its revenue. The Nikkei said that “based on Apple’s current plan,” it would replace potentially as much as half of the power management chips that go into the iPhones with its own design. Power management chips are one of the most crucial and costly components after core processors, modems and memory chips.

Dialog shares fell as much as 23% to 28.53 euros ($33.93) in Germany.

Apple has developed its own processors for years, but has stepped up in-house design of components, including graphics, Bluetooth and other smartphone-related chips, recently. That’s expensive, and creates new risks, but helps the company maintain leverage over suppliers as a recent wave of acquisitions cut the number of chipmakers it works with.

Earlier this year Apple cut ties with Imagination Technologies Group Plc, as it began developing its own graphics technology after years using the U.K. company’s tech for the iPhone, iPad, iPod and other products. Imagination ultimately agreed to be acquired by a Chinese-backed private equity firm.

“The level of visibility into the design cycle of our leading customers remains unchanged and the business relationships are in line with the normal course of business,” Dialog said Thursday in an email. Apple didn’t immediately respond to a request for comment.

By Nate Lanxon and Stefan Nicola

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