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Dialog Semiconductor, according to a financial analyst, risks losing an important supply deal with the Cupertino-based iPhone maker. On Tuesday, the financial analyst – Bankhaus Lampe – has cut his rating on the stock of the chip making company and sent the shares of the chip maker down by as much as one-third.

Analyst cuts his rating on Dialog’s shares, says the company could risk losing deal with Apple

On Tuesday, Lampe reduced its rating on Dialog from “Hold” to “Sell” as according to him the Silicon Valley giant was working on its own battery-saving chip for the iPhone, which could replace the power management integrated circuits (PMIC) of Dialog as soon as by 2019.

According to the estimate of the analyst, the iPhone making giant accounted for more than 70% of last year sales of Dialog. The Anglo-German chip maker says that “it is the world’s top maker of power management chips used in smartphones with roughly 20 percent of the market.”

On Tuesday, the shares in Dialog fell by as much as 36% to a seven-month low. The chip making giant had more than doubled in the second half of last year due to increasing expectations for the upcoming iPhone which will be out later in 2017 – probably by September this year. In a statement, the chip making giant said, “The company notes the level of visibility into the design cycle of its leading customers remains unchanged and the business relationships are in line with the normal course of business.”

Apple setting up PMCs in Munich and California: Analyst

The shares of the chip making giant had pared losses by 13:40 GMT and were 15% lower at $42.97 (40.49 euros). The suppliers of the tech giant are recently in light because of the news related to Imagination Technologies. Last week, the Cupertino-based iPhone maker revealed that it has plans to replace its graphic chips with parts that it is making in-house. After the news became public, the stock of the chip maker declined almost 70%.

Citing unnamed sources, Bankhaus Lampe’s financial analyst said that the iPhone making giant was setting up power management design centers in California as well as in Munich. He added that the iPhone maker had nearly 8 engineers already working on a power management chips of its own.

Referring to power management chips, Bankhaus Lampe analyst Karsten Iltgen said, “In our view, there is strong evidence that Apple is developing its own PMIC and intends to replace the chip made by Dialog at least in part.” According to Thomson Reuters data, Iltgen ranks sixth among 16 analysts covering the stock of Dialog and is a four-star rated analyst for the accuracy of his earnings estimates on Dialog.