Apple is to buy part of Dialog Semiconductor Plc's business - license power management technology and acquire certain assets - in a $600 million deal, expanding the iPhone maker's chip operations in Europe.
As part of the deal, Apple will pay Dialog an initial $300 million plus an additional $300 million for product delivery over the next few years. Apple is buying patents, a team of about 300 engineers, most of whom already worked on chips for Apple devices, and Dialog offices in Britain, Italy and Germany. The British firm also won a number of new contracts from the iPhone maker, including the supply of power management, audio subsystem, charging and mixed-signal integrated circuits, according to a statement Thursday.
Dialog said it would continue shipments of existing main power management integrated circuits (PMICs) to Apple. It expects to sell current and future generations of so-called sub-PMICs to Apple.
After the deal, Dialog expects Apple to account for 35-40 percent of its total revenues in 2022. Headcount will fall to 1,800.
The acquisition is unusual for Apple, which rarely does such deals, and is larger than previous transactions. Apple bought Israel's PrimeSense, creator of the facial recognition application used to unlock newer iPhones, for about $350 million in 2013.
The deal represents an expansion of Apple's chip design operations, which kicked into high gear in 2010 when the company released its first custom processor for the iPad and iPhone. Apple began using its own graphics chips, or GPUs, in the iPhone 8 and iPhone X. That continued with the recently released iPhone XS and Apple Watch Series 4. Apple uses technology from U.K. chip designer Imagination Technologies Group Plc in products like the iPad and Apple TV, but is expected to eventually transition all of its iOS-based products to its own graphics processors.
The transaction is expected to close in the first half of 2019, subject to customary closings and regulator approvals, Dialog said.