Dialog will receive $600 million in cash from Apple to license specific power management ICs (PMICs), transfer specific assets, and prepay future product orders.
Apple will employ a team of more than 300 Dialog's outstanding engineers to support its future development.
Dialog also received a series of new contracts from Apple, including the development and provision of power management, audio subsystems, charging and other mixed-signal ICs.
As the leading provider of custom and configurable mixed-signal, Dialog will focus more on the fast-growing Internet of Things (IoT), mobile, automotive, computing and storage markets.
Dialog announced its intention to launch a repurchase program for up to 10% of outstanding shares after the third quarter trading update.
Dialog Semiconductor has announced that it has reached an agreement with Apple to license specific power management technologies, transfer specific assets and more than 300 employees to Apple to support the latter's chip development. Apple will pay $300 million in cash for the transaction and prepay $300 million to order products for the next three years. The transfer to Apple employees has been working closely with Apple for many years, and this move will further deepen the cooperation between the two companies.
Dialog also announced that it has acquired a wide range of new Apple contracts, including development and supply of power management, audio subsystems, charging and other mixed-signal ICs. The revenue from the new contract is expected to start in 2019 and accelerate in 2020 and 2021.
Dialog plans to accelerate its transformation into a market-leading provider of differentiated and configurable mixed-signal ICs serving a broader customer base covered by fast-growing businesses in the IoT, mobile, automotive, computing and storage markets. Dialog's market for power conversion, connectivity, configurable mixed-signal, audio and charging ICs is expected to grow at a CAGR of 13% and reach $13 billion by 2021. Dialog will also continue to provide power management ICs (PMICs) to other customers around the world.
Dr. Jalal Bagherli, CEO of Dialog, said: "This transaction has once again consolidated our long-term relationship with Apple and confirmed the value of our strong business and excellent technology created by Dialog. Looking ahead, we will have a clearer strategic focus. Relying on our customized and configurable mixed-signal IC technology expertise and world-leading energy-efficient design, our strong business operations records, deep customer partnerships and outstanding talent teams provide strong confidence for our future growth."
“We believe that this transaction is in the best interests of our employees and shareholders. Our business focus will be clearer and our growth prospects will be strong. At the same time, the additional financial capabilities of this transaction will also help us invest in strategic growth plans. Both will benefit our employees and shareholders,” added Dr. Bagherli.
Apple will employ more than 300 Dialog engineers and other employees who have been supporting Apple chip development for a long time, accounting for about 16% of Dialog's total workforce. Apple will receive Dialog's specific operations in Livorno, Italy, Swindon, UK, Nabern and Neuaubing, Germany.
Johny Srouji, senior vice president of hardware technology at Apple, said: "Dialog has deep technical expertise in chip development. This excellent team of engineers has long supported our product development. Now we are working directly for Apple. We are very happy. We are very happy. The cooperation with Dialog has been traced back to the earliest iPhone, and we look forward to continuing to work with Dialog for a long time."
Dialog's revenue for 2018 will not be affected by this transaction, and the company will continue to deliver products currently in production to Apple. The benefits of the deal will further enhance Dialog's balance sheet strength and help the company accelerate its investment opportunities (including mergers and acquisitions) in the IoT, mobile, automotive, computing and storage markets. Dialog intends to launch a repurchase program of up to 10% of the issued shares after the third quarter trading update.
The transaction with Apple is expected to be completed in the first half of 2019, subject to regulatory approvals and other customary closing conditions.
Qatalyst Partners served as Dialog Financial Advisor for the transaction and Linklaters served as Dialog Legal Advisor for the transaction.