The German semiconductor manufacturer and producer of Apple's power-management chips, Dialog, fell 17 percent between Thursday and Friday after Apple announced they are cutting their orders.
Apple released a statement saying they will start using two different manufacturers for the power-management chips for their three upcoming iPhones, meaning Dialog will lose 30% of the orders from last year.
When Dialog told shareholders on Thursday, a major sell-off started, and by the time the market opened on Friday, the Dialog stock was down 17 percent.
The change will result in Dialog losing about 5 percent of their yearly revenue for 2018, however, the company is still expected to achieve year-to-year growth. Even though Dialog has a good reputation in the industry, the likelihood of someone sweeping up the lost order is not very high, and the company is expected to have their 2019 predictions lowered.
Apple has not provided an official reason about why they decided to cut the order, although some claim that Apple is going to start developing their own chips.
“If you think about the fact that we are qualified for all three phones, that means there is no performance-related issue. It might be a statement of intent to reduce the risk of having one supplier and have an alternative source,” Dialog CEO, Jalal Bagherli told Reuters last night.
The Falling Stock Created a Ripple Effect
Dialog’s falling stock quickly spread across the European industry, and Austrian Ams AG slipped 1.4 percent while STMicroelectronics slipped by around 0.5 percent. Although, both companies have managed to bounce back a bit since.