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UPDATE 1-Dialog Semi sees revenue growth resuming as China slump fades

* Sees gains in Q2, H2 revenues

* China weakness fades towards end of Q1

* Margin lift from deal to transfer people and patents to Apple

* Remaining business with Apple up 92 pct year on year (Adds context on inventories, Apple deal, revenue guidance)

FRANKFURT, May 9 (Reuters) - Anglo-German chip designer Dialog Semiconductor on Thursday forecast a recovery in demand after sales of its rapid-charge products were affected in the first quarter by weak demand in China.

CEO Jalal Bagherli said he expected a sequential rise in revenue in the second quarter, and that the second half would be stronger than the first, as weakness in China faded towards the end of the first quarter.

Dialog completed a $600 million deal in April to transfer programmers and patents to Apple. That delivered a cash windfall and left a smaller company less reliant on the iPhone maker, which had accounted for three-quarters of revenue.

That meant first-quarter sales declined 11 percent year-on-year, according to results that had already been pre-released in late April that were above the mid-point of earlier guidance.

Dialog’s non-Apple revenue was down 9 percent, year-on-year, due to the China weakness. But new Apple business not covered by the recent deal grew by 92 percent to $46 million as Dialog scored a number of design wins.

Weakness in China and mounting trade friction between Beijing and Washington have caused inventories to pile up in the semiconductor supply chain.

Dialog said its inventories rose by a sequential 4 percent to $155 million, equivalent to 94 days’ forward demand. That represented a 33-day increase in days of inventory cover from the prior quarter.

Dialog expects inventory value to rise, due to seasonal factors, but sees days of inventory - a key measure of the relationship between supply and demand - remaining steady. Its shares traded 1.2 percent lower after the results. (Reporting by Douglas Busvine Editing by Michelle Martin)