Shivers

If you’re an Apple silicon supplier, shivers are very likely tickling your spine.

It’s not nice to see your shares drop 60% in a day as Imagination’s did when Apple said it was going to make its own GPUs.

It’s not nice to see your shares drop 30% as Dialog’s did yesterday when it was revealed that Apple is developing power management chips.

So, shivers may be chilling spines at Apple silicon suppliers like ST, InvenSense, Qorvo, Synaptics, Cirrus Logic, Skyworks and ADI now it has become apparent that Apple is serious about in-house sourcing of its silicon.

To add insult to injury, Apple has been poaching engineers from Imagination and Dialog to develop in-house replacements which will supplant their soon-to-be-erstwhile suppliers’ products.

It is a story as old as the hills in the chip business.

ST never really recovered after Nokia collapsed when Nokia represented over 20% of ST’s sales.

The 1980s collapses of the games and microcomputer markets had dire effects on chip suppliers who had put too much of their resources into ROMs and DRAMs.

Putting too many of your eggs in one basket is a well-known trap but, when Apple comes calling, how do you resist?

Just how far, one wonders, will this siliconisation of the Apple supply chain go? Processor cores for instance? Does ARM have to shiver? Now that ARM is owned by a heavily indebted Japanese conglomerate is it as attractive a supplier to Apple as it was when it was independent?

And it may not be over-fanciful to look at this extraordinary $27 billion bid by Apple supplier Hon Hai for Toshiba’s chip unit and wonder if Apple money is swelling the bid amount.

Hon Hai is very dependent on Apple. Over 50% of its sales come from Apple. If Apple wanted control-by-proxy over a major 3D NAND supplier it might put up some money to swell Hon Hai’s bid to buy Toshiba.

Samsung, Apple’s main competitor, can make everything in a mobile phone. Apple can make very little.

It may just be that Apple wants to be more like Samsung.


Comments

5 comments

  1. Aha Dr Bob that’s the answer – hold the Cupertino cowboys to ransom – stand and deliver – a cast iron multi-year supply contract or an end to supplies.

    • Sure, Apple with many billions in the bank is going to roll over to prevent losing the next 100 million because a no name company refuses to deliver a generic part …. by the way I have this really nice bridge as good as new …

  2. If those companies could bail out of their supply agreements before Apple has ‘in house’ supplies what happens then?

  3. Right, Jamo they tried to buy AMS. Very wisely as it turns out.

  4. Indeed. Did Dialog not try to buy someone early last year to help reduce its Apple dependency ?
    Skyworks less so affected since the RF front end components like PAs, FEMs etc ate still GaAs. Believe it or not !

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