Shares of Dialog Plummet After Warning That Apple Might Make Chips

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Dialog Semiconductor has tried to reassure investors that it does not expect to lose business from Apple in the near term. Oddo Bhf set a €50.00 ($59.52) target price on Dialog Semiconductor and gave the company a buy rating in a research report on Friday, October 6th. Apple accounted for74% of Dialog's sales in 2016, according to the company's annual report.

Dialog Semiconductor slumped to the bottom of the Stoxx 600 on Monday morning after admitting that its biggest customer Apple could be about to design its own chips.

However, Dialog does not have reason to believe its current expectations of 2018 Apple business would be impacted by such potential actions by Apple.

Investors have become wary of businesses that rely too much on Apple, which has eliminated several of the small suppliers during the past.

The U.S. technology company said in April it planned to replace graphics chip supplier Imagination Technologies, sending its shares down 70 percent in a single session.

Suppliers of semiconductors are barred typically by Apple from speaking about supply relationships. Imagination was sold off following that in two different deals. Dialog, which has previously declined to name Apple, referring to it only obliquely as its "largest customer" or its "main business", said it had received a special dispensation from Apple to mention it. Morgan Stanley set a €55.00 ($65.48) price target on Dialog Semiconductor and gave the stock a buy rating in a report on Wednesday, November 8th. The brokerage said the reaction could prove overblown and that Apple may still decide to stick with Dialog rather than developing its own power chips.

It is working with Apple on plans for 2019 products, and will have a better idea about its future contracts with Apple by March, the company added.

Dialog said it would give investors an update when more details become available, said the CEO.

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