iPhone Chipmaker Dialog Reports Low Sales Projection for Fourth Quarter

Apple supplier Dialog Semiconductor reported on Monday that its projected sales for the fourth quarter of 2018 would be at the low end of its original target (via CNET).

The German chipmaker, whose partnership with Apple makes up around 75 percent of its revenue, said its preliminary revenue for Q4 2018 was approximately $431 million. That figure only just falls into the guidance range of $430 million to $470 million the company reported in October.

The news comes just two weeks after Apple lowered its own revenue guidance by up to $9 billion for the first quarter of its 2019 fiscal year.

Apple CEO Tim Cook offered up a number of explanations for the decline, including the timing of the iPhone XS, XS Max, and XR launch compared to the timing of the iPhone X launch last year, a slowing Chinese economy, and the company's $29 battery replacement program, all of which led to fewer iPhone upgrades than expected.

Last October, Apple agreed to a business arrangement with Dialog to license its iPhone power management technology and transfer technical assets, in a deal worth $600 million. Dialog's shares rose as much as 34 percent on the news, their highest since 2002.

As part of the agreement, Apple acquired some of the Anglo-German chipmaker's assets and 300 of its R&D staff, or around 16 percent of Dialog's workforce. The deal represents a huge investment for Apple, which will take over Dialog facilities in Italy, Germany, and the U.K., expanding its chip research and development significantly across Europe. Subject to regulatory approval, the deal is expected to close in the first half of 2019.

The agreement followed a report earlier the same month claiming Apple would design its own power management chips as early as 2018, which came as a serious blow for Dialog, the exclusive designer of the current main power management chip for iPhone, iPad, and Apple Watch models.

Dialog's shares initially dropped on news of today's revenue projection, but then climbed in German trading, according to the Financial Times. The company was recently up 2.5 percent, cutting its 12-month loss to roughly 10 percent, said the paper.