A teardown of the Lightning-to-3.5mm adapter that Apple is including with the iPhone 7 and iPhone 7 Plus has confirmed that it comes with a digital-to-analog converter (DAC). The Lightning Earpods from Apple also uses a similar DAC.
The inclusion of a DAC should not be surprising since Lightning port is only able to output audio digitally. However, since the 3.5mm jack is analog in nature, the audio needs to be converted to the same format, which is what this DAC does.
The markings on the chip do not reveal who the manufacturer is, but it is likely that the DAC was made by Cirrus Logic from which Apple sources a majority of its audio components.
Headphones with a Lightning jack will be able to receive the digital audio and play it back from the new iPhones without having to convert it into analog. This digital connection –while battery hungry — will allow headphones with Lightning jack to offer superior functionality compared to headphones that feature a 3.5mm audio jack.
While Apple already bundles the Lightning-to-3.5mm adapter with the new iPhones, it can also be purchased separately for $9.