Apple unlikely to use Audience tech in new iPhones

Audience Inc, which makes chips used in Apple Inc's iPhones, said its top customer is unlikely to use its technology for the latest iPhone. The news was not well received by investors, sending its shares down 58 percent in after-hours trading. Audience's chips, which improve voice quality in mobile devices by filtering out background noise, are supplied to contract Apple †manufacturers including Foxconn and Protek Ltd.

The Mountain View, California, company also sells processors and licenses its processor intellectual property to Apple †and some of its units.

Events of the last week in the normal course of business led us to believe that our technology is not likely to be enabled in Apple 's next generation mobile phone, Audience Chief Executive Peter Santos said in an email interview. Audience has been selling to Apple †since 2008. Apple 's newest iPhone is expected to be launched next week.

Although Audience did not specify why Apple †would no longer use its technology, it noted in a conference call with analysts that the iPhone maker has built up its own audio team.

For Audience, Apple 's licensing of its filtering technology accounted for 37 percent of total revenue for both the three months and six months ended on June 30. The company expects to continue to get royalty income from earlier iPhone models that use its technology.

We are not aware of any intended changes by this OEM (original equipment manufacturer) in its use of our processors and processor IP in prior generation mobile phones, Santos said.

Shares of the company, which went public in May, fell to †$7.99 in trading after the regular market close, knocking $200 million off its market value. The stock closed at $18.86 on Nasdaq on Thursday.

The loss of the Apple †contract will not impact Audience's third-quarter results but would affect it a quarter after Apple †starts selling its next-generation mobile phones, it said in a statement.

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