Synaptics CEO hopes to take bite of Apple by buying iPhone supplier
(Reuters) - Touchscreen chipmaker Synaptics Inc Chief Executive Rick Bergman said he would be 'thrilled' to win back Apple Inc as a customer after agreeing to buy the sole supplier of display driver chips for the iPhone.
Synaptics, which last supplied parts to Apple around eight years ago, said on Tuesday that it would pay $475 million for the remaining outstanding shares in Renesas SP Drivers Inc, a unit of Japanese chipmaker Renesas Electronics Corp.
"If Apple is to become a customer of Synaptics again we're absolutely thrilled and happy and hope we can continue the strong relationship that it appears to have had with RSP," Bergman told media at a news conference in Tokyo on Wednesday.
Synaptics, which claims 70 percent of the touchpad market, is muscling its way back into the Apple supply chain after it was dropped as a supplier when the iPhone maker decided to move touch technology internally. Before that, it had made the scrolling wheel for the first iPod.
"Our better opportunities are really complementary technologies to what they do internally. And at this junction I don't believe they do any driver chips internally so that would really be an opportunity for us," Bergman said.
Apple demands its panel suppliers use display driver chips from Renesas SP exclusively as using ones from several suppliers would lead to noticeable variations in the display, a person with knowledge of those negotiations said.
Renesas SP posted revenue of about $650 million and cash flow of about $100 million for the year ended March.
With the acquisition, Synaptics is also aiming to integrate its touch technology with Renesas SP's display drivers, senior vice president Kevin Barber said, which would both improve performance and lower costs.
"There is no one else that can do touch display driver integration right now. There is no other competitor," Feltl & Co analyst Jeffrey Schreiner said.
Synaptics, whose chips are used in Samsung Electronics Co Ltd's devices such as Galaxy S5 smartphones and Galaxy Note 3 phablets, is also expecting growth from smartphone fingerprint sensors, in which it claims 90 percent of the market after acquiring a company specializing in the technology last year.
Apple's iPhone 5S uses a rival technology developed in-house after Apple bought biometrics firm Advantec two years ago.
Reuters had reported last month that Apple had discussed purchasing Renesas SP with majority owner Renesas Electronics, which holds a 55 percent stake. Display maker Sharp Corp has a 25 percent stake and Taiwan's Powerchip holds the remainder.
Synaptics also raised its fourth-quarter revenue forecast range to $300 million to $310 million from $275 million to $295 million on Tuesday, citing better-than-expected sales of mobile and PC products. It said the deal is expected to immediately add to adjusted profit after its expected close in the fourth quarter.
Its shares jumped 17.7 percent to $78.30 in extended trading after closing down 1.3 percent at $66.52 on the Nasdaq on Tuesday. The stock has gained 28 percent so far this year.
The company, which competes with Atmel Corp and Cypress Semiconductor Corp, is scheduled to report fourth-quarter results on July 31.
(Additional reporting by Sampad Patnaik; Editing by Savio D'Souza)