SYNAPTICS Inc (SYNA) June 9, 2026 Conference Transcript

Good morning, everybody. Thank you for joining us at the Missouri Global Tech Conference of Day 26. And we are at KKM. He's an orders analyst for Missouri, and joining me is CFO Ken Rizvi from Synaptics, and also I.R. Munjal Shah, VP of I.R. Thank you for joining us. We really appreciate it. Thanks for having us.

Really, really appreciate it. What a great conference. Thank you for taking the time to...

I think you guys are looking sharp, so I think we'll keep the focus on you. Perfect. I like that. Fantastic. and obviously synaptics just a couple of quick words here synaptics is the brain behind in the background I mean they connect billions of devices across the handset industrial robotics and you know virtual reality glasses etc so that they actually are the brains behind making devices is not just run faster, but run smarter, run connected. And Synaptics has been key to providing that connectivity in this space. They have multiple products in that space, from Astral, which is their Edge AI SOC, but also enabling some of the major transformations going out, especially on the robotics side. With that, it's my pleasure to welcome CFO Ken Rizvi and Munjal Shah, VP of IR. Thank you, gentlemen.

Thank you, Vijay. What a pleasure to be here.

Thanks a lot. I want to go ahead and maybe ask a couple of questions on the Astra side. That's been one of your flagship offerings on the AJI side, driving some of the connectivity and smart edge, I guess. Maybe you can talk to what are the key markets that you have Astra focusing on and how does the pipeline look at them? and you can take it on stage.

Why don't I, maybe for the benefit of the audience here, let me take it a little higher level, and then let's go into Astra, if that's all right, Vijay? So if you look at Synaptics, we have a very rich history. We've been in this business for 40 years and have really driven some of the best technologies in a variety of markets, whether that was in the compute era, whether it in the smartphone era with our touch capabilities and here now as we think about edge ai and physical ai we're really excited to bring a variety of products and platforms and solutions into the market from our sense portfolio to our connectivity portfolio and our processing portfolio and so on the processing side you know we've been making investments in this space on our new architecture for the last kind of two three years or so and it's all under this Astra brand and so as of October of last year we we announced that our tech day this 2600 series of product and that's I think what you're alluding to here Vijay which is our MPU class of product and within that you know we call this our street fighter product it goes into a broad array of applications you know think of your IOT hub at the home think of smart appliances industrial applications like fleet management actually at our last earnings call we talked about embedding that processor in a ultrasound machine that can go into remote locations so it really is a product that incorporates kind of two arm processors it incorporates our own NPU that that's homegrown and also incorporates a Google coral risk 5 NP we think that we're the first to incorporate that into into any silicon or any solution in the market and then we have a variety of co-processors on the on the vision side on the audio side so really does a lot and packs a lot into this solution for those end markets and and the reason we think we're winning in these markets is is for a variety of reasons one if you think about the power and the efficiency we're able to bring for this class of product we think we're unique number two if from a compute standpoint and how we've architected for this class of product call it five to twenty five dollars a very reasonable amount of compute and then when we think about ai and bringing it to the edge and the far edge you know some of the key components there are really about security and privacy and the ability to run these applications natively and locally are one of the other reasons where where customers are coming to us and then finally this partnership with google in terms of being able to access that open source market so our open source model and open source world so a lot of the platforms out there today today are really architected and it's a four wall garden approach and our belief and our ability to win in this market will be based on this open source architecture and being able to work with those models and partnership in that ecosystem that Google can provide.

So that's a good preamble.

So as you look at the Astra roadmap, you mentioned the ARM core and the risk core with the core is there a specific segmentation of market that you are driving towards is arm focused on certain markets and the risk 5 is being positioned for a separate set of markets it's not necessarily a separate set of markets I would say the applications we are going after are the ones I alluded to before I think what we will see is revenues first start in the consumer oriented markets as you would expect just based on on time to money in the in the cycle and the design cycle of those products and then we'll start to layer in more wins whether it's on the healthcare side or the industrial side but it's really folks that are needing to have that compute and inference capability at I would call the far edge of of the network and so these are the the applications we talked about whether it's home appliances whether it is the internet hub, whether it's applications like TVs, sound bars, all of these types of applications will utilize this MPU class of product. But if you look at Synaptics, we have a variety of solutions that we're bringing into the market as we think about the latter part of this year and into next year. So we have this MPU class of product, which we announced at our tech day. That is GA, so going general availability now. We should expect some revenue back half of this calendar year, but really in the calendar year of 2027. And then what we talked about on our earnings call was this semi-custom MCU opportunity. And that same architecture, obviously a different compute and power thresholds than the MPU class, but really targeted for the wearables market. And so when we say semi-custom, we're working with a large partner, targeting the wearable application space as our initial tip of the spear and then we'll move into a variety of other markets and if you think about what we're bringing or what what our customers telling us we're bringing we're enabling them to essentially more than double the battery life which is important for wearable applications and then reduce the overall bomb by north of 50 percent so these are you know very important milestones all as well as bringing in kind of this npu capability on a local basis for this application and i think that's what's going to evolve over time that's part of the thing that we're excited about the third piece is around our connected astra product and so we believe this is the the first solution out there that incorporates Wi-Fi 7, Bluetooth 6, and an MCU in a monolithic die. And so this is the same thing that has been in development over the last couple of years, is sampling now, and then should start to generate revenues as we head into 2027. So these are the exciting platforms and portfolios that we have under our overall Astra brand and technology.

And so you mentioned a couple of markets, wearables, industrial, I think health, smart home. If you were to rank order those, where do you see the biggest, bigger opportunities within those, I guess?

So I would say it's going to be tough to say and call out today, but what I'm excited about is on the wearable side because I do believe as we think about applications on a go-forward basis, and I have a smart watch, I have earbuds. I think there are gonna be other applications that are gonna be more wearables or healthcare oriented as well. And the ability to interact and communicate, get the data, whether it's in the physical world that we're seeing, whether it's in measurements of our own body and body chemistry, all these things will be enabled over a period of time. And so I'm very excited about that opportunity set as we think about the next three, four, five years. One of the platforms that we talked about was this semi-custom MCU class product for wearables. So that's obviously part of my excitement as we think about a long-term path for synaptics and how this will evolve for the overall sector.

And just to set the table, what's the content when you're talking about Anastra, MCU?

Yeah, we haven't outlined the MCU piece, But when we talk about the MPU class of products, it can be anywhere from $5 to $25, depending on the application, whether it's more de-featured in terms of the scope, or if it's more of an industrial application, then you can have $20, $25 of content.

And on the Corel partnership on the risk, is that kind of a similar content too?

Yeah, so one of the things we were at Google, I.O. maybe a month or so ago, and one of the announcements we had was really partnering with Google on this coral board. This is a platform, and think of it as it enables the ecosystem to develop models onto our 2600 series product. It accesses their broader ecosystem, which is helpful to them, but obviously helpful to us as well.

Got it. I want to go to the AR-VR glasses, because this is something that comes up in every conversation that involves synaptics. What's the wearable opportunity, it's come in the past, it's gone in the past, I guess it's coming back now, but maybe you can talk to, and there's a whole plethora of VR glasses on the horizon, everything from Meta to Apple to Google and everything in between, but maybe can talk generally to what you're seeing what your content opportunities what could be a market size opportunity looking at and what's the differentiation really who are you competing against what you bring to the table yeah so this is i mean this is the semi-custom opportunity we talked about on our earnings call we don't specify customers but what we have said is we're working with a large hyperscaler that has a broad ecosystem in terms of the ability to to utilize that

ecosystem and they're very much focused on expanding their kind of their software their software stack as they've done in other other markets and for us I mean what are we bringing it goes back to the maybe two primary characteristics or maybe it's three characteristics so one we're bringing that compute capability on a local basis and bringing kind of AI ability with our npu and also with this open source google coral risk 5 npu into the wearables market number two i would say for this initial kind of tip of the spear we are bringing essentially an ability to double right so more than double the battery life and so that's important as you think about any wearables that you you use whether it's your watch whether it's your earbuds or whether it is new applications like smart glasses you want to be able to use those over a 24 hour period and then the second piece is utilizing our processor we're able we believe to reduce the bomb right and so reduce the number of components that not only helps from a power standpoint which we talked about before but it also helps from a bomb standpoint and why is that important as you think about a lot of these consumer devices one of the the key things is is elasticity of demand and so if we can help our customer and help that ecosystem provide these features at a lower price point lower cost point that provides a lot more value to the consumer number one but it also should help demand overall for the consumer market over the the mid and long term so i think those are some of the factors that we are excited about in terms of what the market size could be i mean this is a newer application so we'll have to see how that evolves i think price is an important or cost is an important factor to drive elasticity but if you look at other wearable applications whether that's earbuds whether that is smart watches i mean these are in the hundreds of millions of units a year so i think there's that opportunity set but this is as an evolving market, we'll have to see how it plays.

And do you expect other offerings, other CSPs, to our consumer-focused companies to join in this ?

Look, at the end of the day, we have to fit within the constraints and the size of what Synaptics is. And if you look at a very high level, we spend probably $300 million, plus or minus, on an annual basis on r d so we got to fit that budget target it towards the right applications i think have you know some of these larger partnerships help us and then from there we can expand into other markets but you'll see us having a reasonable focus on making sure that we're able to execute right this product just taped out here as of our last earnings call it should start to sample here in the fall and then revenues as we as we move into calendar year 26. And look, I think you'll see kind of Gen 1 and Gen 2 opportunities of these products over the fold. Ours is a way to help enable and also reduce, like I said, that bomb as you think about those Gen 2, Gen 3, Gen 4 opportunities.

Got it. You mentioned bomb.

In the past, one of the issues has been the very high price point of these glasses and some of the ethical issues involved in having you know what these glasses do um you think those are kind of already is something that has is getting addressed here in terms of where the price points are and you know what some of the i i think that is the goal right because if you look at um at glasses and and i'm aware i think if you look overall we have the population of what eight billion in in the world today maybe half of the world's population wears glasses so that's a 4 billion unit market if you will and so you know we spend anywhere right you can you can spend anywhere from 25 30 dollars for a pair of sunglasses all the way up to you know multiple hundreds of dollars but i think if we can help that ecosystem drive glasses that are in that two 250 300 range that should drive some It's a mass market device. It's a more mass market device. Now, for our technology, we're not necessarily going to enable this immersive experience. So if you're looking for immersive AR or VR capabilities, you're going to need a different compute, a different power level in order to operate those types of devices. But ours is hopefully more optimized for the everyday user to add those AI features, add those capabilities to interact with the world around us, but at the right price point.

Got it. But do you think the power consumption, et cetera, are very competitive where it can last a week or so without?

Well, we said 2x, more than 2x, right? So I think it's going to be helpful. And look, these things will evolve over a period of time, just as your smartwatch has evolved and your earbuds have evolved.

So I think it's just staying on that curve in terms of R&D and where the world's going very interesting we'll look forward to it so hopefully next tech conference you can wear one of those glasses very good I want to hit some of the other growth markets too and then we'll go back to some of the PCs and perfected stuff going to the robotics side physically I I think this seems to be the rage now whether it's industrial robots or human micro-humanoids, and you have made a couple of very interesting comments around that. In the past, you said you have three robotic OEMs. That pipeline has expanded to 35 customers, and I believe you're also working on the leading humanoid North American leader in humanoid robots, but maybe I'll let you talk about how you see that pipeline.

So this is an exciting space, and And actually, Rahul, who joined about a year ago, within the first six weeks or so of joining, really focused the company as this is one of the key applications that we want to go target. Based on the capabilities we had utilizing all of our technology, whether it's on the sense side with our tactile sensors, capacitive sensors, whether it's on the interface side with the high-speed interface to displays, and then processing and connectivity so robotics was an area that that he's focused the team on and so you are correct so we've talked about in the last couple of earnings calls we went from column one or two engagements we have three or thirty five various engagements and running essentially three pilots out of the 35 and I would say where we're leading today and those are all human robots they're both a lot of them are on the humanoid side but there are other robotic applications in in areas like industrial markets and the like and so what is interesting is you know we have a great foundation from a technology standpoint around touch right whether it's in the compute space whether it's in the smartphone space where we've essentially been the leader in touch and especially at the premium class product so if you think about our signal to noise ratio from a tech standpoint and where we play that has been one of the key differentiators of synaptics over a multiple decade period now what we're seeing is that actually customers are bringing us into this new field and this new opportunity and so think about your your hand as an example where we're seeing a hand and feet and and the like where we're seeing a lot of interest from customers pulling us because if we think about a humanoid application or a robotic a robot in an industrial application that is sensing a very variety of packages or a variety of habit objects you need to have the right sense capabilities and so you can see with some of these humanoids anywhere from let's say you know 5 10 15 of these touch sensors per per hand and so and then you're seeing him on the feet and you're seeing a different parts of the body as well and so we're seeing this customer pull uh an interest based on our technology that that we've delivered over multiple decades in these other markets and then that along with the interface technology because a lot of times what you'll see is you'll you'll have a display uh on a humanoid application as you mentioned and so you need to have that that high speed interface to to provide and and make sure that data is getting up to that that display and so that is is the initial entry point but we're also then bringing to bear the capabilities we have on the processing side as well as the connectivity side and what we are also seeing is we're working with partners like grin as an example that are building out reference designs that will be a complete hand or a complete arm that goes into these markets for industrial was that grand this is one that I think we showcased at embedded world here in Germany a few months ago and even even at CS and and they've showcased utilizing not only our sense but our processing and our connectivity capability so I think the reality is we don't know how this market will play out right there's these pilots going on today especially with one of the large north american players that's going into pilot yeah expectations are we'll start to see more kind of full-scale production as we move through 27 28 29 and beyond but we're seeing a lot of interest from both well-funded public companies as well as a number of well-funded private so is this more from primarily the content sensing I guess I would say the the lead entry point is with a lot of our sense and interface products today and but we're also now starting to see the pole and we're starting to pull in the processing capabilities because when you think about some of these subsystems and particularly in a humanoid you may have a core processor or multiple core processors but then when you look at the the limbs as an example you may need to have localized localized processing there so that was an example that we had you know at embedded world at ces just showcasing the capabilities to have localized processing in the hand connectivity as well because these robots even if they're stationary may need to interact with other robots or if in the case of a humanoid same thing be able able to sense what other robots are out there or connect back into the cloud.

And just to get a general idea, what's the content per robot? And if you look at the, you know, there's, everybody seems to be building a robot these days, but might be you'll have a robot next time you come to use, but, what's your approach? We already have our own avatars, but then we'll have our own robots, too.

That's a relations robot. so what we've said is multiple tens of dollars of content opportunity and I think this will evolve depending on what that architecture looks like if you think about a hand and arm a leg a foot over time and how many local how much localized processing you need versus more centralized and select twenty thirty dollars per robot let's say um how like any thoughts on what that time looks like um i i mean we look at the same reports that you're seeing out there the public reports and they're talking you know millions of units out i want to see the one that you looked at well you need to publish one you know a humanoid report those your competitor just published one today but but um But nonetheless, they're talking about, you know, millions of units of opportunity. Now, we'll have to see how this evolves. I think there's a lot of capital, a lot of interest. If you think about the use cases, whether it's home service use cases, whether it's on the factory floor, there's lots of use cases for these robotic applications. We'll just have to see how it plays out, though. But it's an exciting space.

Yeah, sure. And there is a lot of players in that space from, in the, you have figure AI, you have Tesla, but you have a lot of robot companies in China too. And you know, they have the robot Olympiads. Do you guys have any of those in the Olympiads where they're like tripping over and falling?

Well, we don't ever talk about specific customers, but if you look at those 35 engagements, what I would say is the majority of those engagements are still here in North America. we have some sprinkling in Europe and then the rest are in China as you'd expect.

But kind of similar opportunity whether it's kind of sensing side might be in the couple of Yeah, the opportunity within these applications is going to be the same.

If you need the ability to be able to sense between a variety of devices, whether it's this flower here versus a steel pipe, which is what we want and how we use our hands on a real basis then you need a capability like our tactile sense right and so those applications are going to be here in North America they'll be with customers in China in Europe and the like you mentioned human robots but you also mentioned industrial robots so it might be factory automation are you seeing a bigger ramp there there is warehousing you know handling I would say it's still early I mean this is part of that 35 engagement opportunity and And so I think for us, this is still evolving early days, but from a tech standpoint, that's where we're very excited that we're bringing some of the sense capabilities that we've had for decades that we think we are best in class in terms of the actual technology, the interface as well, and then the processing. So I think this will evolve over a period of time. And if you look at our focus, it's only been in the last year that we've been really focused on this market. So this will be one of the areas when we think about physical AI, when we think about the capabilities of the company, we'll start to target.

Exciting. You should classify this as a whole new growth segment, the future growth markets.

Okay, all right. Okay, this is helping.

You know, robotics and all that. We're jolly selling us. Yeah, I'm going to talk to Vijay. And give out the time and content there. But as you see those markets growing, and obviously there's 35 customers just on the robotics side, do you see that going to 10, 15, 20% of your, you know, as you grow that I mean, we got to see how this market evolves.

But if you look, right, a lot of times these markets can surprise you, right, especially on the upside, over a mid and long term period. So this is one where it's still early days.

I think it showcases the unique technology and capabilities that we have yeah we know there's a significant amount of dollars coming into this market on the private and public side but but it's still early days so we'll have to see how this evolves I want to quickly jump because we've got just a couple of minutes left on the handset market sure it's been painful right as units are down for 15% this year maybe we see another tough market next year but you guys have focused on the premium end of sure and that's kind of benefited a little bit and also you know foldables is another absolutely picking up it's fairly mainstream and not mainstream but has picked up significantly faster in China maybe you can talk to what is the opportunity can you outgrow the handset market, outgrow, meaning not down 10% versus market down 15%. It might be flat.

I mean, where do we play? So today we play on, as you outlined, the premium or flagship models within the Android ecosystem. So you know there's a large Korean OEM that we service, and a number of OEMs in China that we continue to service. And it's really at that premium class area. now they're there we've done very well here in the last couple of quarters i mean memory is is one of the questions that i think people have asked that has impacted i'd say the lower end handsets the most yeah we'll have to see how it plays out but but thus far um we've been more insulated than other parts of the smartphone market and so you know we we have visibility kind of one quarter one quarter ahead in this market so it's always one of these things that's an external factor we have to be aware of vj but in terms of our opportunity i think it's not only just the normal unit-based growth that you see on the high-end smartphone market within the android space but then the secondary factor is the foldable side so we've come out with this multi-frequency touch solution we've have wins and we talked about a win with the korean customer here maybe two earnings calls ago and then one with a leading china customer as well these should start to ramp kind of in the fall and into into next year and essentially when you think about a foldable phone you have the large screen and then typically the the oem will use the same vendor on the outside screen so for us it can essentially double the content now these are still in the low millions of units in terms of the overall market but i think there's an opportunity for that to grow i think there's some noise around a us oem that that's that may be launching a a foldable phone as well and that can help trump but that can help drive that overall ecosystem we continue to like i say only play today in the android high-end android markets but it can hopefully help the overall demand profile all right and so going back to the foldable side when you look at the china market are you fairly well represented there on the foldable side across multiple oems so so what you'll see you know our goal right we're worth a large korean oem we talked

about one large china oem and then we will proliferate into other oems in china as well but you know step by step okay um fantastic i want to go back to the gross margin sure profitability side um back during covid you know and the for good or bad timing was great you know you had iot ripping sure there's a massive tailwind there's a big contributor revenue growth and margins post-covid you know we had a little bit of slump across the board and analog everybody else right inventory correction the whole thing that's right and so So now as you see some of those similar trends that you saw in Kuwait, things are tightening AI digital demand is strong, memory is tight, pricing is starting to move up. How are you seeing, are you seeing a similar pricing tailwind, are you seeing a margin upside from some of this Astra and you know the AR VR stuff and maybe you can color that picture a little bit on how you're seeing that whole landscape.

Sure I would say you know when we think about on a longer term basis products like and like our Astra portfolio around processors should be you know margin accretive over a period of time. I would say in the near term even over the last you know three four quarters the team meaning the operations team and the overall team has done a pretty good job in terms of managing some of these cost headwinds that we're seeing, that everybody in the industry is seeing, because of this demand that's being sucked up by AI in the overall ecosystem. And so that has rippled through the supply chain. I think that's one of the things that we have to continue to look at and manage here, as we think about the next 12, 18 months. you know this is not a phenomenon for synaptics per se but for the overall industry is that there are cost headwinds that we the industry will see from whether it's the front end the back end and then how do we mitigate that over a period of time you know does some of that get passed along to the the broader customer set are there ways that we can value engineer as well or look at second source but it's one of the the areas that we'll have to continue to navigate here as we've done in the past and and to that point with so the input costs going up are you having the ability to pass on a cost or raise pricing well I mean thus far what we've done is is you know even over the last four quarters or so we've been able to absorb some of these costs and keep the margins you know very very reasonable I would say during that period and so but But this is the thing that we'll have to continue to evaluate on a go-forward basis, is how do we manage that, how do we pass potentially some of these costs along to our customers. These are the things that we'll continue to navigate.

I think we've got one minute left, if anybody has any questions. On the PC side, how are you thinking?

Now NVIDIA wants to get back into the PC market, I guess. piece i mean for us right these are one of the areas where we have i call it franchise uh businesses where we're typically you know number one number two in these markets we have been for for years and years and years so it is really more of a unit based uh market for us so i think it will be a question of does that help accelerate uh the unit volumes over a period of time if it does then I think that's a net benefit to players like Synaptics. I think on the PC side the other question people ask is similar to the smartphone market which is around memory as well and what does that mean really tough for us to gauge in terms of the impact to long-term long-term demand but that's another factor we just have to continue to to be mindful of and and navigate.

Fantastic I think that brings us to the top of the hour so really appreciate the time. I could have gone for another hour, but we really appreciate the time. Obviously, you guys are enabling connectivity across just billions of handsets, phones, you know, PCs, everything in between. But exciting to hear all the stuff going on on the robotic side and AR, VR glasses. So looking forward to it. So thanks again for coming to the Tech Conference.

Yeah, really appreciate it. Thanks for having us.

Thank you, everybody.