Image source: Synaptics.
It's been quite a while since Synaptics could call Apple a customer, but the chipmaker might have just won the Mac maker back.
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Last year, both Apple and Synaptics were reportedly interested in acquiring Renesas SP Drivers, which is the sole supplier for touch and display driver integration, or TDDI, chips in iPhones. Synaptics ended up purchasing the company, which gave it a shot at winning back Apple's business through the acquisition. Synaptics paid $475 million for the smaller company. Shortly after the acquisition, Synaptics CEO Rick Bergman said, "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."
Apple has now ordered TDDI chips from Synaptics for the 2016 iPhone, according to DIGITIMES. The news comes just a few months after Synaptics announced that it had begun sampling second-generation TDDI chips to OEMs. Shares jumped 6% last week on the report.
Getting back togetherOnce upon a time, Synaptics supplied the capacitive components that made the iPod click wheel possible, but as Apple transitioned to capacitive touchscreens across its products, it also transitioned away from using Synaptics products.
Synaptics' acquisition of Renesas has been a huge success since it accelerated Synaptics' roadmap for TDDI offerings. TDDI adoption continues to rise, since the technology allows OEMs to integrate touchscreen controllers and display drivers together directly, enabling thinner and lighter designs while also lowering overall component costs by using a single-chip solution. Synaptics has previously said that it expects over half of all smartphones will have display-integrated touchscreens by the end of 2015.
It might just be a flingIt's worth pointing out that while Apple may be coming back to Synaptics as a customer, it might not stay for long. The Mac maker has reportedly been working on an internal in-house TDDI offering, hiring away Renesas engineers a while back. But Apple's TDDI development is supposedly behind schedule, according to DIGITIMES, in which case it is turning to the familiar supplier in the interim.
Apple's eventual TDDI chip may also integrate fingerprint sensors, which could even allow the company to eliminate the characteristic physical home button by integrating Touch ID capabilities into the display.
Synaptics' main flameWhile Synaptics would certainly appreciate some Apple business, it doesn't need it. Investors have seen countless other Apple suppliers get burned, but Synaptics is doing just fine selling into the rest of the smartphone market as well. That's especially true in regard to fingerprint sensors, which Synaptic has been offering to Android OEMs following its acquisition of Validity Sensors in 2013. Samsung uses Synaptics' fingerprint sensors in its flagship Galaxy phones.
Companies that rely too much on Apple face significant customer concentration risk. That's not to say that Synaptics is free from customer concentration risk. Its three largest customers, one of which is Samsung, accounted for a combined 60% of revenue last quarter. Still, adding Apple as an incremental customer is never a bad thing.
The article Synaptics Incorporated Might Have Won Apple Inc. Back -- for Now originally appeared on Fool.com.
Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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