Dialog CEO brushes off worries it could lose Apple as customer

FILE PHOTO: Dialog semiconductor logo is pictured at a company building in Germering near Munich, Germany August 15, 2016. REUTERS/Michaela Rehle/File Photo

FRANKFURT/MUNICH (Reuters) - Dialog Semiconductor poured cold water on claims that it could lose Apple Inc as a customer, saying that relations with its biggest customers remained very strong and that signals for new projects were positive.

Asked about Dialog’s business with Apple, Chief Executive Jalal Bagherli told Reuters in an interview: “The relationship remains very strong, we have been invited for the design of a lot of new products, more than we can choose.”

The Anglo-German company’s chips go into Apple’s and Samsung Electronics’ smartphones. An analyst report suggested last month that Apple was looking into ways to design its own chips, causing the stock to drop by more than a third during one trading session.

Apple does not allow its suppliers to discuss their relations with the iPhone maker, but analysts estimate that Dialog gets more then 70 percent of revenues from Apple, making it the company’s biggest customer.

“When we get to the end of this year we will be talking a bit about 2019 projects, products that will be launched in the third quarter of 2019. And we certainly have no sense that there is any breakdown in our relations with our biggest customer,” Bagherli added.

“It is completely to the contrary. All the signals in terms of time span, in terms of the number of projects, all the indicators that I would go to the bank with and get a mortgage with are positive,” he said.

Dialog said earlier on Tuesday that it expected its second-quarter and full-year gross margins to come to around the 46 percent it reached in the first quarter.

“There is always pressure from large customers but if you look at 46.1 percent it is a very respectable margin to keep across the year. It certainly doesn’t signal a big drop or pressure on pricing,” Bagherli said, adding that margins could improve early next year.

Reporting by Harro ten Wolde and Jens Hack; Editing by Maria Sheahan