Imagination Technologies Group Plc is just one of the many worldwide Apple suppliers. However, the tech giant decided to decrease its activity with the chipmaker incrementally for the upcoming two years. As a consequence, the company might receive only one-third of its earned royalty rate. However, Imagination Technologies is not the only one in this situation. There are several other suppliers that might suffer the same fate.
Apple Decided to Create more Chips on Its Own
Analysts at USB financial services are expecting a difficult period for Apple suppliers. Their somber prognosis concerns companies such as Dialog Semiconductor Plc, Synaptics Inc., Cirrus Logic Inc, and Imagination Technologies. Based on future weak professional relations with Apple, the latter one might even end up on the negative side of financial figures by fiscal year 2019. As a consequence, the British chip designer might be forced to resort to cost-cutting strategies to address the upcoming issue.
The reason behind this drastic change of industry landscape is Apple’s decision to create more in-house products. The company is determined to conquer new domains of technology. However, this offensive plan requires special equipment, especially chips. Thus, Apple set on to build Bluetooth, graphics, and other chips related to smartphones on its own.
A 2012 Wave of Acquisitions Stole One in Five Apple Suppliers
This move might be expensive for the company. However, the effects might prove to be successful in the long run. The fact is that the company doesn’t want to be dependent on third-parties anymore. A new wave of acquisitions has already impaired Apple production by making a number of chipmakers unavailable for the tech giant.
The company has always relied on at least two Apple suppliers for each of its elements to sustain a low price as much as possible. However, over the course of last year only, one in five of these third-parties was acquired. Some of them are Sharp Corp, SanDisk Corp, Elpida Memory Inc, Intersil Corp, TriQuint Semiconductor Inc, FR Micro Devices Inc, and others.
As this year is an important one for Apple, there is no more room for indulgences. The company is getting ready to launch three iPhones. By cutting ties with its suppliers, Apple has more freedom of decision over its own hardware. Moreover,the Chief Financial Officer, Luca Maestri, revealed during a February event that in-house products are cost-effective, less time-consuming, and deliver more quality.
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