Apple secures ‘critical’ iPhone tech in $600m deal with UK-based firm

Apple has struck a $600m (£454m) deal with technology firm Dialog Semiconductor that will drastically expand its microchip manufacturing operations.

Under the agreement, Apple is taking on 300 staff from the Anglo-German chipmaker and will licence processing technology that is “critical” to iPhone production, Reuters reports.

The Californian tech giant has used microchips sourced from Dialog, based in the Berkshire town of Reading, to “extend” the battery life of its smartphones since the first iPhone was released in 2007, the news site reports.

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However, Dialog’s shares have been in free fall since November, after Apple “threatened” to develop its own power-management chips, rather than buying them from the processor firm, according to Bloomberg.

The new multimillion-dollar deal “guarantees Apple’s custom for a while and ensures that Dialog doesn’t walk away with nothing”, the news site says.

Speaking to the BBC, Dialog chief executive Dr Jalal Bagherli said it was the best possible outcome for the company.

“They [Apple] wanted to create their own solutions in-house,” he said. “We could accelerate that, but in the process monetise some of our intellectual property assets and also find a home for many of our employees in a good company - I think it’s a win-win situation.”

Apple has already paid Dialog $300m (£226m) upfront to secure its power management technology, acquire lab equipment and patents, and take on the 300 employees, the Financial Times reports.

The remaining $300m will be paid out over the next three years, the newspaper says.

The deal is “largest of its kind by Apple”, beating the $350m (£265m) purchase of PrimeSense - creators of the iPhone X’s FaceID scanning technology - in 2013, adds Reuters.