SYNA - Earnings call transcript Q3 2022

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Operator

Good day and thank you for standing by. Welcome to the Synaptics, Inc.

Third Quarter Fiscal Year 2022 Financial Results. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today's recorded. [Operator the I Shah. to will Instructions] conference now Munjal [Operator today, hand over speaker your first you begin. Sir, may

Munjal Shah

you on Thank joining name on of web is I XXXX our our and broadcast website Investor Hurlston, Good and you, My Michael thank Shah, the of Peter. conference President call. us can third the Synaptics CFO. live call today's are and am today Munjal section quarter Relations. Butler, fiscal afternoon me and for Head from call Dean at accessed being This is over Relations the and be CEO; synaptics.com. Investor company's the With

on to we current The slide color presentation, website. with on our a been a supplementary and have slides addition results. earlier have copy Form additional as on supplemental the our Investor prepared to our SEC an exhibit today also Relations posted In filed remarks X-K furnished report also of financial these add

In issued reconciliation press the compensation, results, after close the a section market addition of detailed Relations Investor a release to excludes can be Please for at or website management items. which will non-GAAP certain of basis, synaptics.com. today the results share-based results, non-GAAP provide and non-recurring supplementary from GAAP also the which accessed the costs non-cash or on and refer other recurring company's acquisition-related to GAAP company's

that remind like will would we course you forward-looking to the make conference of Additionally, Synaptics during this statements. call,

our and currently business the COVID-XX impacts future performance and condition, supply the projections expectations to global industry. including financial objectives, of affecting current pandemic chain results operations, and expectations Forward-looking semiconductor business, potential of plans, shortages disruption on regarding the our component the related statements give our and our

the and actual We you may inaccurate. estimate prove from and differ cautions reasonable, that any company's future control from beyond number to call filed Form subject to with a factors materially in our they results Michael. cause the reports to of Synaptics believes may update to refer to statements. I forward-looking the XX-K be any results statement. this contained to differ be forward-looking are performance uncertainties the suggested assumptions risk to information. over turn risks expressly any most our actual in periodic disclaims Synaptics that Although recent will and and report materially company's those including current could SEC, for on Synaptics annual important now obligation forward-looking our

Michael Hurlston

call. reported Thanks, with Munjal, largely and today's We I'd IoT products. quarter of guidance another our revenue in to above excellent the to like everyone midpoint due to welcome strength our range

our the We our delivered which of record portfolio total quarter over to the operating the first IoT Our in in that grew I proud a few mix range. challenges constructed revenue revenue led years margin high history. end one XX% the our or with our particularly IoT results can am more guidance company's non-GAAP our margin, for showcase accounted EPS year-over-year. diverse non-GAAP time gross weather above and of XX% group, was record product product last and groups. Higher of the and record XX% above in profitability for non-GAAP

This quarter, some overcame headwinds. we well-documented

was as weaker many reported, handset Chinese have sell-through First, than expected.

customer haven't expected base. than our we across experienced in revenue Although any weaker seen we position, share erosion Chinese our

are these of In overall We seeing PC revenue, PC challenges, in represents to but paid our into expectations, we initial against maker are down earnings. of continue softness all in we SKUs, overweighted caused forecasting report margins addition, Our area, gross North growth portfolio also year total commercial a mobile In off mid-single-digit customer, due diversify which and strategy a some sustainability once modestly to a our to our American Why? and significant has underperformance narrow handset percentage. our continue to portion has strong for now revenue business exposure spite believe sales. quarters. our will That a handset only our record exposure units. Outside ensuing to the we spades.

are with customer portfolio stronger a base. We a diversified company more and

interface of franchise. growing the PC. product video have Wi-Fi as We drivers Virtual than Drivers our in Reality drivers each these and of offsetting in in our growth we in sustainable family of series headsets, a circuits four faster do mobile are: that than chips, choppiness combo areas Display our portfolio view a Bluetooth TDDI automotive, company well, and products. IoT are continue of to All offerings and more overall, growth or These

best The win of the our which continues at have designs to new we as overall to connectivity continue growth first drivers new customers. and trajectory wireless ramp is

high strength XE have We ability Wi-Fi operator traditional bandwidth multipath boxes. challenging shown set-top applications, applications, particular chips and customers in video over-the-top sustain primarily in value combo environments. our in differentiated these in to In

able to our into traditional DSP Synaptics as as as systems. been such have we cross-sell video addition, In combos sockets, conferencing platforms new well both Group

well, performing are particularly in solutions wearables. GPS Our

the device we accelerating being our want in own Bluetooth advantage to Thread/Zigbee this early Wi-Fi we a take features engineering wireless are momentum and is that of Triple-Combo and sampled single chip XE, capability. customers Our with business, are To protocols. that engaged support

adding roadmap more have product taped the out already to in have engineering organic we we deliver place. talent we are While devices, two

some the edge wireless our IoT in acquisition local to market. opening a our in develop Europe Combined we expanding As such, we leveraging DSP with in we the additional announced and center and are RF of from purpose-built for France, hiring, position leading Wireless base presence the products and expertise. talent strong analog research feel Group development and of our

display headsets. second of drivers drivers that Virtual growth is specifically designed our The Reality are for

given incredibly As this market share. grows, Synaptics will benefit high our market

entertainment designs and content across have gaming well we these particular, is suited major with almost China as been for that are and in sales impressive. Our we market early have In with geographies all in results platforms. headsets traction leadership shipping have doing OEMs whose

the leader offer technology density by clear displays reality experience and the of point the eye. pixel are that virtual for the solutions focal enhance user We at increasing

displays, roadmap and Our continue we as leading the precision win technology supports that we evolves. to market will expect higher

seeing another us displays the back are for We driver TDDI automotive of beyond. growth is design-win confidence circuits half for year calendar the for strong activity giving and Synaptics.

As we have reported the from in early automotive before, ICs touch migrating panels TDDI. display of an innings and are integrated discrete to

in Our significant and to we TDDI share continues the as see high continues rapidly of top direction, line move to benefit. market this be

ramping evident new as we quarter, designs more across This all the multiple cars second geographies in half launched. will become had which the are

a growth we that roadmap enable expect leadership sizes of TDDI maintain have as our leading display us other As with our solutions increase. will drivers, to we automotive

video driven driver Our docking incredibly well beyond refresh entire demand, and the interface growth which of work been and applied our to workplace family products is bottom-line fourth The remote significant of have to stations. initial docking station by traditionally both technology market do top continues an cycle.

share In fact, Dell, new four has featuring a announced stations lead, market devices. of just who significant our docking three

docking historical devices. host has interface our of of way products a been their While area new are into strength, video finding whole our

docking content. see First, continuing Synaptics bringing for expanded it wireless traction we to with are

are products applying monitors. our we smart Second, to

technology our in customers are using a of conferencing Finally, video host designs.

video the products. in is growth this interface our of fueling core of All

for is future. we product new introduced Several is multiple in of opportunity offerings, group technology could driven a adapters second protocol However, our have beyond that we have converters design-wins of expect launch new grow frontier told, products ODMs completely core, interface of that half our and at a with us. for opened year. diversity OEM have which video by a foreseeable we and significantly to products using customers one the incredible the All calendar into the that set

well we tinyML the Katana DBMXXL areas processing. IoT portfolio. and our Summit, month, be SoCs portion to demonstrated network used A speech While with technology couple on machine with capability. natural both of low doing AI we machine Last vision power these a four our how across are learning drive and areas touch can ultra-low-power and the significant processor engines include our neural growth, in at other

soundevent keyword counting, and applied We to meter spotting, have reading. detection, device the occupancy

a We with with new OEMs market. power this and applications for in AI leading are long-term potential and low significant working have see design-wins edge TAM

processors sell monitors. set and have where box We we content top into areas and market video such outside operator as to video are smart the platforms, core our conferencing additional new moving security systems,

also some it entry including our and been DSP announced have and can Hall VR presented a panels. and TAM just market, the fitness opens quarter drive products cross-selling introducing applied gaming over The TWS sell to chip The be have our better been able have first video customers. interface expected full enterprise cross that a can automotive opportunities of a products surprised by headsets, large we totally This a single video headsets, than performing a to Group, as capacitive, business. into processors UCC pleasantly inductive, we been are IP into and products in robust security single device. Finally, with controllers, After voice wireless multitude products. and that new Effect we have ULE ambient combines sensors

with demand set to new Finally, engage products totally product able customers of for cordless a we our and remains strong have surprisingly entire been portfolio.

PC move group. product me our on Let to

features OEMs of the notebooks traction win second designing pad calendar like good in latest half be into will touch OEMs Our solution level highest best-in-class We introduced of that performance security. top our it seeing because that is with the NIST XXXX.

and to engaged we resultant larger a ASP with are lift. OEMs as transition to Haptic expect Additionally, they Forcepads

Our the increased to simple, fingerprint one-touch authentication. biometric due rates seeing need attach solutions are for

in increased is year, to box, but on to the expect ASPs. performance SKUs, higher down continue focus we particular a content to earlier, importance of well stated TAM As next do to flat which we per the commercial a and be to will PC mix due gradual to

is of Mobile, about company now XX% revenue. Finally, only

XXXX. we where is flexible display half to second in material high-end more expect new the starting is new traction opportunity of we us today. a have for calendar and Our OLED a This gain share ramp limited driver

touch continue technology to well with We do in China. our

continue OLED expect go with and more chain. as better features. models to lastly, we high-end handset do performance featuring introduce displays, And on new solutions production to As advanced particularly well, supply would flexible we to

guidance results account recent into China. the take Our and lockdowns in

demand to supply areas areas gaps in fast-growing gross financial shift of expect in To continuing earnings. the seeing our year areas supply calendar headroom business, improving see record seeing to challenges. created of are Generally, beyond. a still some as aforementioned in and quarter softness of conclude, was yet our are IoT, we company portfolio, QX the and for we While of we the the margins throughout the result have chain limited another

differentiated higher-than-average we growth. continue growth four will have line believe drivers to top deliver that We

will very our we stands pieces go-forward to we’re look feel with we today, continue to improve happy While as add the prospects. it portfolio that

our review to let call turn Dean Now, quarter and me the financial outlook. results our third to over provide

Dean Butler

Revenue and strong products. in from and IoT, results our quarter of DSP XX%, Thanks, $XXX for respectively. the current XX%, financial completed growth March for good revenue our to significant start Michael, provide XX%, the first sequentially, related full a I’ll IoT afternoon strong to was PC of outlook. see review Group. was with quarter the and million, by to the company’s of where quarter continued the Revenue quarter and IoT, Revenue acquisition was everyone. recently March and XX% Year-over-year, with were for customer our our Mobile demand driven inclusion the XX% guidance. demand up up above midpoint of results continue then we

sequentially. revenue and XX% IoT up Our product XX% grew year-over-year was

of is IoT product almost in largest rates now billion grown size straight rate and $X.X high outpacing double-digit one semiconductor making our at approximately results, with these run IoT-focused all Synaptics for combined. nearly has lines quarters, PC of sales. twice the the players IoT seven With Mobile peers,

be Our year-over-year. as PC sequentially, for continues was grew China reasonably But we’re product focus revenue down result on region. some affecting experiencing been notebooks. past but in lockdowns softness Michael the our several mentioned, this as supply as a chain to demand commercial X% of customers’ PC has in X% stable Overall, quarters our

and sequentially coming than year-over-year, product in Mobile X% increased expectations. lower prior revenue our grew Our X%

in for our product sales and and environment and lockdown We We China, to across OEM inventory U.S.-based experience recent by Europe, both China a COVID been unrest that customers. believe hampered above-average protocols leading continue local at products to political demand have weaker these by customers. the

distributors each greater XX%, shipped distributors of multiple at servicing During the such, XX% revenue, don’t these of one customers or and two approximately specific any wide had variety our A these OEM OEMs. of we quarter, being as both through end market. products than represent

$X.X fair intangible our asset For in was of of value the includes a intangibles of and adjustment compensation company share-based were at transaction million, gross of million, which March of and March of of costs, million acquisition-related quarter, costs. prepaid costs amortization, restructuring-related of share-based million GAAP XX%, includes consisting $XX.X amortization $XX.X and million. million, $XX.X compensation $XX.X inventory operating $X.X of development million which record $XXX.X new margin the expenses quarter GAAP amortization costs costs $XXX,XXX

expense the In tax of GAAP million was GAAP March $XX.X Our for quarter, net net income $XX.X income share. had GAAP per or quarter. we million the of $X.XX

the our a continue strong gross inclusion and were input prices. at prioritizing $XX.X Group. non-GAAP value new $XXX.X tax of quarter of the Now, full for reflecting quarter quarter passing quarter results. expense the the guidance products, to of was $XX.X non-GAAP DSP of our mix non-GAAP was March preceding turning and Non-GAAP range, the high-end at million, quarter. of million we to as through company expenses up from margin highest mid-point million our March while guidance record operating the first changing XX.X% a our due above

a non-GAAP the ago. million Our above quarter guidance rewarded same of XX% from an shareholders of in with non-GAAP increase in EPS incredible income $XXX.X quarter of share significant the This high-end year per which increase was our record our March range. and $X.XX increase has profit the was prior XX% the net from diluted quarter of an

of XX the driven of closing of the leaseback of and transaction down flow end XX short-term from with the Jose accounts were balance $XXX of an and during days, at on preceding million quarter from to the equivalents proceeds cash turning $XXX quarter from million We $XXX Now cash were million of San sale and days office. our ended the $XXX sales quarter hand; operations million receivable a of cash, strong linearity Receivables sheet. last the more $XX March quarter. of reflecting net the increase from by million positive investments and outstanding

which days our $XXX and million fourth during were XX, $XXX quarter. Our the quarter million the quarter revenue was in balance for XX ending depreciation days million. line range to expected material with was Capital $XXX pipeline ship we of be inventory inventory in to last was quarter as million. million, of expenditures for $X.X June We the and anticipate was $XX.X to

expect Mobile. We IoT in in to than PC and products strength more continued our offset softness

our constrained remainder year, many of the calendar position coverage backlog of for at are continues high above orders IoT we the still our to with Backlog products. ability to be Our quarter full demand. was start representing the service our as robust our the significantly the of limiting especially for supply end guidance range customers'

also COVID the have impacts in Europe. unrest or supply-chain or resulting demand known any factored China political in lockdown from We

basis, more respectively. XX%, Mobile We faster our market year-over-year growth and has and which to expect our revenue than a XX%, sustained than which June been trajectory, products resulting significantly in mix products our trailing in highlighted. IoT-focused PC approximately be a three from the more quarter XX% and We IoT, a anticipate previously broader believe the XX% growing faster on year than rate IoT compounded, reflecting XX% peers, growth we've of we than semiconductor

gross We to expect our range to margin for in June XX% be the GAAP the XX%. of quarter

and which expect GAAP in to our cost range amortization, restructuring quarter to million, share-based expenses We the compensation prepaid operating in million amortization, the intangibles development of June $XXX includes $XXX be costs.

per expected GAAP Finally, to range June for be $X.XX. net is $X.XX our the income the share to in of quarter

ago the XX.X% bears points at and outlook profile would June as results. XX% the one higher expect range quarter to in our be midpoint quarter, than the approximately XX.X%, gross XXX to non-GAAP for tangible the for product strength Now same year diversification basis our of non-GAAP we strategy which margin be the of of

million, our operating in connectivity, by interface reality, as We investments the video expect the range our our Group June virtual increase the be are as non-GAAP acquisition such continued from opportunities of automotive expenses and the $XXX synergies wireless offset $XXX in to quarter from growth March to in applications. million quarter organic DSPG an

quarter. non-GAAP the $X We interest be in million approximately net expect June our to expense

for approximately fiscal non-GAAP rate our XXXX to expect tax be We XX%.

our currently and are form, XXXX law the certain relate disallowance in changes, to evaluating expenses years. the which tax tax We and their fiscal impact future changes capitalization of foreign required credits. of will current These R&D tax

increasing tax As it XXXX. non-GAAP stands rate beginning now, quarter we long-term to first the fiscal our our anticipate approximately XX% of

over share the remarks. Finally, our up operator session. Q&A an diluted shares. be This now to $X.XX June wraps Operator? non-GAAP per in start the quarter to net turn to prepared range share XX $X.XX income per I'd call our the fully million anticipated for is to estimated like the on to of the diluted

Operator

Instructions] first come question Cowen Krish [Operator will and from And with Company. your Sankar

Krish Sankar

for Hi my taking and Yes. and thanks Dean. results. on excellent Michael the questions congrats

and question is exposure a the Dean. are also kind then for The into, little new Michael you processors how video a one VR/AR in what two first media bit we the and a for of that conference talk part the such revenue side platform. follow-up competitive of about going business are about Can strengths security Both and just segment on business? and think to as that your

Michael Hurlston

competitive display think Krish. driver. mean questions, the we on of our given Good Yes. AR/VR, have advantage I performance just I

a pixel and that's the this densities along talked remarks the displays and from start features in where working density ability higher started introduced have those and into bring to OLED, these as products those then micro production. with axes LCD to moving is customers on make about I'd to at already prepared the we eye One point we've increase kind the second then key And of Synaptics technology. is point the unique to of focuses, the

we the again. we're ahead we and LCD, on ahead then think feel display like we're evolves, as core technology So

bring our we've of key one the of conferencing that is things On acquisitions. done the in one video systems,

Epec of screens take processors things that may DisplayLink. go-to-market advantage much and the over rooms our employ that. narrow to over our things transport You things conferencing beauty of compressed that isn't product very able DisplayLink's link pipes. nature, universal of around technology in able been the systems software and is wireless, we've compress being nature to new docking, and use video largely with, the the conference that's or do remember, but highly use video And Zoom then to and that to which very that this video wireless like so the decoders around video for they it's in the Rome, And

So market but that's item compression really really at forefront of. a that big been the video were lead us, guys for the the is the DisplayLink

Krish Sankar

through Got it. question input Very any mean, I linearity about about Can And you gross – you're how talk managing for helpful. to costs audio Thank then clearly, impressive And that? how you on color Dean. a saw quick you you, little very the and Hurlston. a quarter? bit Can that the margins. talk think

Dean Butler

question, Good Yes. Krish.

probably been probably shown. number So as the know, those as you have to able of input cost last We've a dealing I been results manage over industry the with of has quite think the sort year. well changes

team environment. going pretty a changed. change, think, would so job, us and suppliers prices been of offering set. as pass across One expect and focusing more are we keys to some product dynamic. dynamic prices input board that, of the end, managing and has the greater the the in a fairly to the We've Look, we're for command Therefore, of and the a sort product good Input it's prices reasonable through therefore, portfolio done continue that have a ASP can differentiation forward. higher sort premium do product the on from I of

Krish Sankar

color linearity. And Dean. any it, Got the order just on

Dean Butler

about not of you're probably that there's loaded for seasonality. June quarter. linearity, loaded. that's asking would The order I that nor front-end typical to quarter June of nothing would the I the quarter It's It probably say sort sort – isn't think back-end Yes, unusual. be relative

Krish Sankar

Thank great much. very you congrats on Thank the results. you and

Dean Butler

Thanks, Yes. Krish.

Operator

with from Needham & Company. question will Your next Gill come Raji

line is open. Your

Raji Gill

a my in echo tough to congratulations great really I environment. And Yes. That's see.

the on of quick growth. a unit growth question Dean, ASP IoT, Just, versus

XX% versus March Your those and XXX% and you June. unit going What growth to is in both split grow grew the another almost between for June, IoT numbers? have ASP business March, it's in if

Dean Butler

areas But the Raji, Yes. I specific I ASP don't March will major at the think have versus unit I June and sort growth four about the that growing seeing one business two Michael remarks level, say, highest what that talked the growth. prepared for are part really design into IoT things his of the that in are are years. engines now. greater market Many have delivering to wins been that of

in of a Michael think on And example for right? touched good while. I been sort that's pipeline a automotive,

starting see those And changing, see as mean take that off, likely price you of I prices time been will of ASP that So amount increases. mean bear through. are improved move. ASPs to have to results you're think move, I any the to input infotainment ASP a to there's continue if we certainly sort you're get I going continues resulting increase. that some

Raji Gill

Got it. That's helpful.

on Just bit on the quarter detail I'm in a you wondering thoughts And kind much of as how IoT terms in the contributed any well. could the of if provide DSP little what business, contributor. biggest was

have within ranging auto VR segments to wireless. different You various from to IoT,

And so a lot there's there. segments of

contributor wondering the what's DSP. was Just in what biggest

Michael Hurlston

know what how. on we've call I tried the growth draw these if Maybe were and I to was drivers. contributing Dean on mean four don't attention have comment, this I Raji, four obviously, to which the relative I'll of have breakout. do Yes.

I been from. where think not that we've clear past, in feedback particularly received coming is it's the growth the

Raji around that well I I those IoT these DSPG So breakdown, to discrete of business a on PC been the and assuages and specific on a give But areas I contribution. headwinds four strength concerns. in there's are company. given think, talk know, in and business, the And there's if them you as And have our point that concerns, think one. the of color you I what us, tried know can some They see business lot to obviously, sort from of hopefully, growing. clearly Mobile and you our about the the don't of all is doing don't a Dean, very some of obviously, IoT extremely we've fashion.

Dean Butler

had we on also with announced which year. is how which thinking is revenue DSPG, with last DSPG, trajectory the roughly of quarter, announced we're now we per sort June about true the quarter, $XXX Yes. is in – and line when said million the results

ballpark quarter. in million of the $XX a that's So

it sort continues to that run in of So zone.

think few opportunities. we've I identified a cross-selling

supply So the certainly, our expectation over between it's of – And is get quarter to the time. such those a in different, where up Raji, fastest-growing can and move nearest for as driven, those. little right? it's as VR, each most So growing that sort quarter, we bit we sort X WiFi we and incremental very demand sort of areas supply, I to supply would deliver execute say, can of growing pent-up we work have products soon

it in actually comes sometimes And choppy.

Raji Gill

it. helpful. I really for Thanks That's appreciate those insights.

Michael Hurlston

Thanks, Raji.

Operator

question next will Fargo with Wells come Gary Securities. Your from Mobley

Your line is open.

Gary Mobley

in issues little you expectations detail that weakened or Hi, China-related more that for question – to supply interruptions may down between guys. chain chain on it on Hoping Thanks specific supply for time for venue. may quantify a challenges. taking how and your demand wanted any as double-click what well perhaps I my relating to this to impact can relating first break and the not. then

Michael Hurlston

it. to for call, the being and Gary, Yes, of welcome part thanks

factored we've number. the lockdowns in remarks, As in our Chinese the of think I all I in said

these alluded of customers of most then, pieces so business And question, your supply course, and from as PC seeing Shanghai, with our to of part, you're lockdowns. the there not on. are chain But handsets For sitting you we our is it sort most based and we've in on of are that the number specifically their channel. in from number, that of thoughtful contemplated receiving inputs Again, and all been they in are the how like things we and buying about houses we're think that. gauge the we've where

think I echo done diligence on that captured. everything got Dean, more the one? So we some know, you want we think don't and do we've we've to

Dean Butler

I to we had give Yes. love if one. Gary, mean, a would we quantification

said, called hey, we X, want customers not is cancel So and look, the Z. have to reality like it's Y, us

seem certainly really that And those We cancellation. received areas that the specific haven't sort it therefore, good of to sort a think of and that effect. of to tough just is us seeing does any We've happens to of it's seen But a quantify some regions. are PC the part the business supply And Mobile for chain due impact. effect. slowing run I like in

Gary Mobley

it. Appreciate the Got detail.

a for a me naive that uninformed a might gave little way, update since been but XX%. margin I asking it's question a been this Forgive or and in over gross last think have year you

over running basis obviously You're above points that. XXX

acquisition, additional view post-DSP long-term but financial do you you not only for the comments the So on how any have gross targets the margin? also operating

Dean Butler

Yes, XX% this it's March. quarter good quarter. XX% Look, last we're question, at midpoint a Gary. We're guiding again

sort most continue robust with input is of objective changing manage that can dynamic to Our the we prices. the profile to fairly and to grow business. environment a It's

XX% is that what exactly acquired relatives basis plus. We a that XX%, of sort since points, saw we growth a to the tell DSPG, give to margin. including mentioned the XX% up sort us stabilized gross get for margins. that rate some tough about business, when around they long-term To were gross running actually path it's of you couple of to So you hundred

don't time. is some code continue have So XX% formal of probably on What is, probably for a in north I we XX%. the this maintain update would look, to our answer we committed say will ZIP

We long it the XX% mix for our continues at investors. of as product the will keep positive to sort be range as

Gary Mobley

Thank you it. guys. Got

Operator

Cassidy Kevin come Your with Rosenblatt from Securities. will next question

open. is line Your

Kevin Cassidy

and taking for congratulations. my thank you Yes, question

any you're more that Is still the, it there chance towards can some demand, you same wafers? market providing mobile supply the the IoT so all but your separate move just that like the is IoT. of looks saying companies market under the ones from even more, the from are into are With that are suppliers wafer the they or your wafer say markets shifting are

Michael Hurlston

good Good most you that categories. distinct hear Kevin, always. distinct true part, question. as Yes, are for is these from nodes latter product to for the the

we an most as share overlap little very would a say have the product. in IoT, product note for the might to of the PC bit but headroom, And process IoT little where not mobile, that's We we're said a and getting the part in bit expect But ever, call case. and I tough same supply remain it as PC I it's a in of tough.

covered could we chain mean, optimize, highest per diffuse difficult theory do do that toward supply that for we're that forth our can. the just probably of to us So in if as put of is as you wafer we last trying that, the optimizations Day we I is enough But Dean than the lot obviously we given would. kind we chain said, dollar than a supply have, value our most. we Analyst more

Kevin Cassidy

May be a what new I'll device displacing product you with me. go technology interesting to Understood. fusion And processors, or category kind whole question. is that are a of just it sensing? FlexSense Okay. to very of The smart

Michael Hurlston

these that it's much swipe kind bring had that to of interaction a a in So, importantly, different pulling off, fingers power between integration, Kevin there's here together, for when a savings, can that to touch huge and an a products if we're by you or able sensor, inductive when One headset is play The have but action. run will perhaps there's up is huge typically kinds what savings, idea and we what capacitive much, discreetly to of of di more get distinguish harder enabled. discreet do sensors you sensor you obviously, is area down sensor, four your it right? three sort of you're sensing. And able motion, pick the whereas

we So the like category. really

And can introducing into revenue it. differentiated I we else we something we'll here. for But plays obviously We've see how markets. sell. core something gives have just we goes. us that's it today. think it's our incredibly us It started it no think But

Kevin Cassidy

you. Got it. I agree. Great. Thank

Operator

Your next with question Rolland Christopher will come Susquehanna. from

line Your is open.

Christopher Rolland

thanks the guys, attention. obviously for either, way. PC a Hey get segments question. either or guess guess mobile are they and I now, Michael lot of smaller Dean but I

of the year, or you think next to look grow a you that want at year? XX months, either whatever there's If year for calendar fiscal possibility you these on year do do

Dean Butler

in it of, prepared the little sort Yes, a I on again, I touched remarks. think mean, Chris, we bit

think, flat I many PC, as to down. have our TAM, to the For competitors talked is that of

true. And around whole I of have that's don't kidding, C. So, Parts I we in problems where We've acknowledge idea B Part have think but business the and that A, seen that. would been I this

And for challenges well. in so us that's business as some the posed

out toward or we're skews up if listen which However, holding reports doing the various commercial, be again, the well in to you skewed PC area to there, seem better. commercial

introduced controller it. introduced it this more Our secondly, the year education. traction touch is We with go with And higher us to is it and PC think or than up that this for commercial we share. start but then last to pad into as opportunity manufacturers hit we’d new exposure see chip. that there’s pick cycle to would that’s when to to We’ve I consumer much

this commercial concept that this we us SKUs So and we ForcePad share. to leads where think for where attached also the ASPs. an is thing to mix of would some there’s I opportunity third pick of that And on higher ASP say fingerprint then up full the increased see

So, the is yes, to down. mobile, think TAM a thing. it’s there I where even path an in growth, environment think a On I is similar

China you’re And China, there that’s a of this mix favor. got would you our with are as remember, and got things you’ve One, You’ve small do it’s OLED overall still mix. where well expect controllers, of OLED flex really of more these on a We their couple displays touch portion really, for year, flexible calendar up first play opportunity we going shifts from that in we have launched if more toward end toward that we to opens that our just last the OLED of year, of this the tail the display got talked that’s mix targeted displays as driver toward revenue new saw we at the we remarks, it in OLED, then this about quarter. flex us.

constraints expect unanticipated to of that big in supply a second pretty that I with to into have because fab. able We remarks new product would supply half year. as the volumes coming calendar said, it’s well relatively the we the the some we’re due the of chain product, If in that, with prepared challenges, in resolve

Christopher Rolland

of year? And ultimately you supply want, What headwinds of be then on for are comfortable inventories? could you. half get you back level where sort thank of could if you inventory, could one that this – take what with in some the Where Great, or the them? take PC even maybe you Dean, for with you particularly could mobile

Dean Butler

is supply a and outside a is Yes. there’s quarters bit inventory just the like area mobile March the mean, of more where’s on than actual I ideal in constrained. our the we’d much area probably mean what ended, our constraints, of in IoT PC the probably in Part more I little on lower where in than a fact little would inventory results state we be. inventory

those world, from Chris? positions So to be bit inventory our But a skewed of your in we’d perfect the a that demand question, looking I answers a little ideal here. shocks inventory we’re still drive up some to two areas. think due in bit If little

Christopher Rolland

does. That Dean. guys. Thanks, Thanks, job. Great

Operator

from Vijay come Mizuho. will question with next Rakesh Your

Your line is open.

Vijay Rakesh

and Hi, great Michael Dean, here. Yes. quarter

Just a couple of questions.

Could within of you what the that if IoT, the I’d wireless be side, the about buckets, IoT DSP talked say TDI at you think give and growth you were different I the within video what that growth might those and when were, of out the within VR IoT four the interface. mix buckets? like XX million, four those guess and but connectivity in On about look you buckets rates connectivity great. XX% could you and what’s rates parse I and talked about – be wireless would just

Michael Hurlston

earlier. a get more quantified on these you’ll What is don’t we quarter-to-quarter. Yes, availability, and Vijay, I that the detail understand depending and it good in a specific little it’s bit choppy actually have it results stratify you need to supply question. are chain think Raji asked been any might

sure of it I’m useful granularity and to supply that it to pluses the be with go would a is. of so level the the each really minuses further way chain of And actually of that sort through walk not sort and

Vijay Rakesh

to were us years, you think two or or Thanks. instead if year you so or in And you, you the that’s automotive past, thoughts going sized around give for opportunity could headset opportunity, were TDDI I automotive that? out opportunity some have if you but the a look it. it. Got of quarter-over-quarter, to size VR the

Michael Hurlston

we don’t AR/VR in is at look go to our have what share. and outsized the have multiyear obviously both we I – sort plan know In Vijay, of both TDDI, market Yes, areas.

AR/VR drivers, Because headsets. I of question. shipping think first the on that headset of all asked have, think differentiators the I display the the majority the some of we in that think it we’re vast I was Chris

a that think reasons I situation don’t to share continue that continue. you’re going there market the characterized. we expect I we to But So, it’s natural outsized that for mean competition. where will to we see enjoy technical all

of that right would overall volume. we say you right? whatever that grows, less asking Similarly, out probably we’re mean put the cars market. RFQs and there display think we’ll for market opposed tip that it, starting with grow XX%-plus are to discrete TDDI, and I as The to shipping TDDI of than those the is are a wins. in of share lion’s way. now I on I but discrete touch, the XX% to auto As market have exposed now now

high, do market think So market expect to share, our we remain well. that we’ll as continues you TDDI, it can I towards to and see move

to Dean? some I think it, just right, gave frame we automotive around numbers

Dean Butler

Yes.

revenue sort in what think Our that I previous significantly think of of goal is sort our the TAM the modern We I XXX was that’s sizing the we undersized was and that. of it cockpit now sort probably And of undercalled previously. cars, today’s given of said revenue We’ve larger. XXX, around digitization we’ve goal. automotive of size surpassed that

Vijay Rakesh

Thanks. it. Got

Operator

with question next Your Craig-Hallum. come will Anthony Stoss from

Your open. is line

Anthony Stoss

too comment. it especially much on you Have then you the made that? And felt undershipping you, that on your think there’s as inventory. results, order? been a on come also customers, that congrats you side. Michael, guys margin in to hiccup wanted a then result Michael. for Or heard a I on correctly for could guys, of they gross Hey focus you the that you do strong short Chinese I believe I had in probably

into if of us ASPs a can you versus that agreements Given see different with seen shortages the customers? year, of economy. over where a the give lot component you have supply of XXXX kind slowing maybe it’s a your on entered curious of last especially if just we’ve I’m kind view long-term XXXX, in kind you

Michael Hurlston

as for sort say. handset may first we Look, we of to be Tony. than inventory know Yes, the saw there I don’t that built I the said And one, in expected think weaker harder result. makers. was we’ve a channel, sitting I inventory Chinese from – what think it’s but the up us on don’t sell-through

Gary out. was played some through I we’re I think has will That’s and of on demand. what’s of most it, think going earlier question maybe for drama. part, multi-quarter that an And that a impact customer – there end think barring from the most I been in around the China

guide. I handset that’s has has this And and think Sell-through then most too think the in reflected been the of early to weaker. numbers played Chinese makers I out. the quarter’s tell. But obviously, inventory in

you think second I had a question.

Dean Butler

Was on long-term agreements.

Michael Hurlston

Long-term agreements. question, Yes. Again, good Tony.

our We’ve I percentage are them. know to them. that. what of think secure hard I do don’t worked we to have customers LTAs, on subject

at for stabilized input moment. situation lot about the that a point, longer-term talked pricing, I least think Dean that we of your pricing the dynamics to As would say to, the for

hearing minimum will Dean his flat increases that able we’ve – And but bunch certainly products. that in coming, get we’ve of be We're local said there now more rumors as new a actually right hit launching been local point. able or sort We’re use to new to design price of comments, we’ve to wins. a been

increase. ramps growth seen near-term price the least So a revenue as we've new opposed at here, the of product to in has more been that lot

Anthony Stoss

Perfect. Best guys. you. of luck Thank

Michael Hurlston

Tony. Thanks

Operator

come will question Ambrish Srivastava next your with from BMO. And

Ambrish Srivastava

we that wins kind calendar estimates? with? the coming for the is you company's and to us that at so are appreciate of I consensus based Q-over-Q comfortable the something sure commentary with the design the on for ramping comfortable looking year, growth up many much. the think very mid-single of rest I that's digit year. gave earlier from, on are Is where do. you of Michael, tie do to appreciated. us breakout trying I'm Question Thank help growth you the that The and on see

Michael Hurlston

for the mobile say sort I on bit IoT Ambrish us continues macro What of and the area don't PC Look, number, but exceptionally but there's of model a level. well. specific I at can't comment the bombs we think perform Yes. changes would in speed to little a

our highest think those sort strength may I overcome I of may despite think what not is in happen can probably the the or it. that IoT level, perspective So areas at smaller two

Ambrish Srivastava

in synergies would baked Got it. because no yet, DSPG that soon. And too right, there's be

Michael Hurlston

committed of to any were We drive one achieved the there's synergies. revenue, Many we operating actually majority our opportunities DSPG we've largely the June to revenue expenses implied So the that those on date in of forward. vast already sort combination top synergies us on and that hadn't line for certainly think of guide. our

Ambrish Srivastava

had you, business PCs own Got traditionally kind mix environment. it. the know one The even and the weighted which so is "steady about way isn't that state" just now Q-over-Q seasonality final normal I seasonality. semiconductors – normally state, in mobile, think us if purposes, What's IoT modeling but a towards And growth just versus to its anymore then of and what changed much right has for don't Dean. one steady to for you help were so

a that that Thank pick model you. kind for longer term can we of in? So

Michael Hurlston

XX/XX rough just run out say I the volatility largely first being maybe sort that of top it is and order seasonality. Yes. a of a start I of of a high company mean, number moving would level – XX% level state to takes that PC as sort the If mobile. sort end steady the sort guide, XX% of a of if on IoT had longer-term, then lot you June in seasonality the plus use model. that once

the still enough you constraints, probably say muted areas an seasonality. chains, it'll muted I very would supply abnormal environment, far seasonality, longer of it's more drew much would line now sort typical term. think will their those have that's Right I have out while be a if but you So always

Ambrish Srivastava

does not seasonality diversity? you're is any And IoT's is because the what of you – suggesting, have what

Michael Hurlston

will different that also diversity also well. in product sort there. ramping a businesses of areas Because fair the there's as many tailwinds, of which have in diversity growing seasonality long-term It's of down tamp

Ambrish Srivastava

Great. Thank you. Thank you.

Michael Hurlston

the but we'd position year last we've feel think a exposure, QX see calendar seasonality One, I put with now business mean, those you'd obviously do then like away lot I think by QX We'd a into the had just I years. out – we dips that's had XX took think there's that our half and I the and mean, if right. sort are QX certain no basically the handset We gone. PC and just fact handset taken seasonality maker to it where one past mix it's broader, and calendar broader, previous of that the the you huge to right. in of Okay, virtue exposure our This exposure seasonality particularly in QX, I given of is in that toward we I down in it huge got Ambrish maybe can short think of year IoT, years strokes, in right. yes, we'd remember seasonality. Dean's

Ambrish Srivastava

you. it. the Thank all and the Appreciate Great. Right. transparency for Thanks details.

Dean Butler

Yes. Thanks Ambrish.

Michael Hurlston

Ambrish. Thanks

Ambrish Srivastava

Thanks.

Michael Hurlston

thank to I'd like everyone.

Peter. Hey Sorry.

Operator

this questions no time, Michael have I may Hurlston you proceed. Mr. at

Michael Hurlston

to look We during I'd our conferences upcoming thank today. to us forward the to you Thanks. of at all speaking you investor for like joining quarter.

Operator

This concludes today's conference call. Thank you for participating.

disconnect. may You not

Synaptics (SYNA) 6 May 222022 Q3 Earnings call transcript