Article By : Alan Patterson
Synaptics is developing new chips for growth markets like IoT in VR and EVs.
Synaptics CEO Michael Hurlston rescued the chip designer from the collapse of a billion-dollar–plus business when it lost Apple as a customer a few years ago. Now, Synaptics has assembled a new tech portfolio aimed at design wins that add AI to edge IoT devices.
The company, founded 36 years ago by industry luminaries Carver Mead and Federico Faggin, has created much of the technology behind touchpads, fingerprint sensors and display drivers. Through acquisitions in the last few years, Synaptics is developing new chips for growth markets like IoT in virtual reality and EVs.
“One of the things we want to go into is artificial intelligence at the edge of a network,” Hurlston told EE Times. “We want to make decisions on the chip rather than go back to the data center and use high compute and high bandwidth.”
Synaptics is still harnessing the direct algorithms that would run on its chips.
“We need algorithms and machine-learning models,” Hurlston said. “We’re making strides in solving that problem with this Emza acquisition.”
In October, the company bought Emza Visual Sense, an Israeli AI developer. Synaptics is sampling its first chip that incorporates Emza’s AI.
“The application is presence in front of a PC where the PC — to save power — will turn off if you walk away,” Hurlston said. “One of the big things that people get worried about is privacy. If somebody is looking over your shoulder, it can also sense that and dim the screen and put it into privacy mode.”
Hurlston isn’t yet satisfied with the results, noting, “We need some work on it.”
The AI runs on Synaptics’ Katana chip, the first version of which was released nearly two years ago. In addition to visual sensing, Katana does audio, temperature and environmental sensing.
Synaptics is counting on IoT, its main business, to keep driving sales up. Yet expansion of the overall IoT chip business will slow from the strong growth of previous years, according to market research firm Gartner.
Hurlston joined Synaptics as CEO in August 2019. The company has since bought three other firms that feed into the company’s IoT and wireless connectivity business, including DisplayLink and DSP Group. DisplayLink technology enables displays to connect to any computer that supports USB or Wi-Fi. DSP Group adds voice processing and wireless technology to the mix. The third acquisition includes the assets and manufacturing rights associated with the former wireless IoT business of Broadcom. Hurlston previously ran the wireless division at Broadcom.
Synaptics is the backbone of most security systems, including those sold by ADT, he said. “Those acquisitions sort of fueled that.”
Synaptics’ acquired IoT businesses have had “astronomical” growth rates, Hurlston said, adding that the company’s internal IoT businesses grew at rates of up to 40% during the Covid pandemic. “You had a lot of growth drivers where people were bringing gadgets into the home, and we were beneficiaries of that.”
IoT security is a vulnerability that Synaptics aims to address with its edge AI push.
“One of the thrusts is to make more decisions local to the device itself by not transmitting information back and forth, for example, to a data center or anywhere else,” Hurlston said. “You’re contained within that ecosystem, and so the ability to hack is much lower. Hacks are happening as information is transmitted across the internet or across the wireless link.”
When Synaptics devices are transmitting over Wi-Fi or Bluetooth, they use standard security protocols.
“We have the industry’s best security in our Wi-Fi chips, the most advanced security that there is,” he asserted.
Hit by Apple
Before Hurlston joined Synaptics, the company had what he calls “an outsized dependence on Apple” that made about $1.6 billion in annual revenue. “Almost all the revenue actually was coming from only one socket at Apple, which we knew was going away.”
Synaptics was supplying a display driver for Apple iPhones until the smartphone maker decided to switch from LCDs to OLEDs as the display. In that transition, Synaptics lost the socket to OLED glass supplier Samsung, which also makes display drivers.
“Mobile in the semiconductor world from 2005 to probably 2015 was really the place to be,” Hurlston said. “Mobile was growing like crazy. Everybody wanted a smartphone. Probably 2015, 2016, the world turned, and suddenly, mobile wasn’t so attractive.”
Synaptics has had to diversify its portfolio.
“We obviously like Apple as a customer, maybe not on the mobile phone side, but their PC business and gadget business,” he said. “We certainly continue to look for ways to engage those guys. We’d love to see if there are ways to engage them on PCs or on some of their IoT devices.”
Apple is by far the biggest spender in the semiconductor market, Hurlston said. Synaptics continues to count other large names like Amazon and Google among its customers in smart-home products.
If you look at platforms rather than just technologies, you start to see some of the synergies at work in Synaptics, Hurlston said.
“We think a lot about platforms, and video conferencing is one. The PC entry point — docking stations or wireless monitors — is another platform where we can bundle multiple technologies together.”
Synaptics supplies chips for docking stations to Dell.
The company’s new concept is to make a wireless docking station that applies several Synaptics technologies. Synaptics envisions wireless monitors that would eliminate all physical connections except for a power cord.
Video-conferencing systems are another opportunity, Hurlston said, noting that his company has the necessary voice over internet protocol (VoIP) technology, as well as technology to play back video.
Automotive is a growing business for Synaptics.
“Here, we’re combining two of our historic technologies going into a totally different end market, and that is touch technology and the display driver technology,” Hurlston said. “We’re able to go and apply that to these larger screens that are coming in the automobile, primarily for infotainment.”
Synaptics expects to emerge from an industry-wide inventory correction during the second quarter of 2023. Despite the slump, the company predicted during its most recent earnings call that gross margin will stay at about 61%.
The company is already seeing recovery in the Chinese smartphone business. The PC business is expected to rebound next, followed by consumer electronics.
“We think net-net, we start clicking on all of those businesses by the second half of next calendar year,” Hurlston said.
The industry slump has caused Synaptics’ chip foundries to drop prices by as much as low-single-digit percentages in recent months.
As a result of its recent acquisitions, Synaptics has 10 foundry suppliers. Hurlston aims to reduce that number to two to gain greater pricing power.
“Our predominant foundry guy is TSMC [Taiwan Semiconductor Manufacturing Co.], and they’re the largest supplier to us, but we work with GlobalFoundries, UMC [United Microelectronics Corp.], PowerChip, Silterra — the list goes on and on.”
Synaptics wouldn’t survive without TSMC, but UMC has also been a good partner, Hurlston said: “We do have a lot of specialty processes. Our automotive requires a high-voltage process, and we’ve really been pleasantly surprised with UMC. They’ve done a good job for us on ultra-high voltage. That would be a relationship that we’d probably look to expand over the coming years.”
Synaptics mainly uses trailing nodes ranging from 28 nm to 130 nm.
“Chips that we make like display drivers or touch circuits or even Wi-Fi and Bluetooth combo devices are very heavy analog,” he said. “With those, you do not get economies of scale as you move down the process. Our analog circuits are really complex, and down at 7 nm, sometimes you just can’t get them to work.”
This article was originally published on EE Times.
Alan Patterson has worked as an electronics journalist in Asia for most of his career. In addition to EE Times, he has been a reporter and an editor for Bloomberg News and Dow Jones Newswires. He has lived for more than 30 years in Hong Kong and Taipei and has covered tech companies in the greater China region during that time.