Cirrus Logic at KeyBanc Forum: Strategic Diversification Insights

On Tuesday, 12 August 2025, Cirrus Logic (NASDAQ:CRUS) presented at the KeyBanc Capital Markets Technology Leadership Forum. The conference call, led by John Vin, highlighted Cirrus Logic’s strategic diversification beyond the mobile market. While the company is expanding into PCs and automotive sectors, it faces challenges with customer concentration and the evolving demands of AI smartphones.

Key Takeaways

• Cirrus Logic is diversifying beyond smartphones, targeting PC and automotive markets.
• The company is maintaining gross margins above its long-term target of 49-51%.
• A partnership with CommPal aims to enhance user experience and address systemic challenges.
• Cirrus Logic is actively exploring mergers and acquisitions to accelerate growth.
• The company is pulling back on Android investments, focusing on high-growth markets.

Financial Results

• Gross Margin: Cirrus Logic’s gross margins have consistently exceeded the 49-51% target due to a favorable product mix and supply chain efficiencies.
• Operating Margin: Operating margins remain in the mid-20s, driven by operational discipline and strategic investments.
• PC Market: The company has generated tens of millions in the PC notebook market this year, with plans to double this figure next year.

Operational Updates

• Camera Controllers: Cirrus Logic is shipping three generations of camera controllers, with the latest offering a sixfold increase in processing capability.
• HPMS Expansion: The company is expanding its high-performance mixed-signal (HPMS) content to include haptics, power conversion, and control, especially for AI applications.
• Android Market: Investments in Android are being reduced due to limited growth potential, with a focus on more promising markets.
• Automotive Market: Cirrus Logic is introducing timing parts into the automotive sector, seeing potential in enhancing the in-cabin experience.

Future Outlook

• AI Smartphone Opportunity: The company is well-positioned to meet the increasing power management demands of AI smartphones.
• PC Market Growth: Cirrus Logic targets the mainstream PC notebook market, excluding the low end, with an addressable market of approximately $1 billion.
• M&A Strategy: The company is actively pursuing mergers and acquisitions to leverage intellectual property and achieve growth synergies.
• Diversification: Efforts are underway to reduce reliance on the mobile market by focusing on PCs and automotive sectors.

Q&A Highlights

• Smartphone Demand: Pull-forward demand in smartphones impacted the fiscal year’s latter half.
• Camera Content: An increase in camera content is affecting revenue seasonality.
• PC Market Success: Cirrus Logic displaced a long-standing competitor by offering lower total cost and superior audio experiences.
• CommPal Partnership: This collaboration addresses challenges related to audio distortion and mechanical rattle.
• Android Strategy: While sales in the Android market continue, R&D investments are directed towards more lucrative markets.

In conclusion, Cirrus Logic’s strategic diversification and focus on emerging markets position it well for future growth. For more details, refer to the full transcript below.

Full transcript - KeyBanc Capital Markets Technology Leadership Forum:

John Vin, Analyst, KeyBanc Capital Markets: Okay. Good morning, everybody. My name is John Vin. I cover semis here at KeyBanc Capital Markets. We’re pleased to have Cirrus Logic with us this morning.

We have Jeff Willard, CFO and Kala Birligi, VP of Mixed Signal. Welcome guys.

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Thank you.

Jeff Willard, CFO, Cirrus Logic: Thank you. Thanks for having us.

John Vin, Analyst, KeyBanc Capital Markets: Hey, maybe the first thing we can just talk through is, you know, when you kind of reported your results, you talked about maybe seeing some pull forward in demand of smartphones and talked about how that kind of shaped kind of the back half of your fiscal year. I was wondering if we could just kind of recap that and talk about kind of the dynamics that are driving that.

Jeff Willard, CFO, Cirrus Logic: Yes. I think there were a couple of dynamics. We do think there was some pull ins. It’s hard for us in the value chain to know exactly how much. I think it’s probably hard for anybody to know exactly how much.

So that was certainly one factor. Another factor for our business that impacts what would be our seasonality is camera content. So as camera content becomes a bigger piece of the total revenue pie, that has to be shipped earlier. So it’s a there’s another step in the manufacturing process. The camera content goes to a module maker and then goes to the end assembly.

So as even if we remove any kind of pull in impacts, that’s just a structural difference as camera content becomes a bigger piece of the total revenue. You’ll start to see that earlier in earlier quarters than when it was a smaller piece. And that was showing up this year. That started to show up last year. But that was really one of the other driving pieces.

So that was really impacting the timing versus our outlook for the year, which we think remains relatively the same.

John Vin, Analyst, KeyBanc Capital Markets: Okay. Thanks for walking us through that, Jeff. Just a follow-up on that. You have been obviously shipping camera controller content for several generations right now. So if you’ve been shipping for several generations, why is it impacting the seasonality of this year versus previous years?

Jeff Willard, CFO, Cirrus Logic: Yes. It’s really a percentage of the total. So as we’ve generated more or shipped more and more generations and those start to waterfall through different products, They just become a bigger piece of the total. And that’s really what you’re seeing. And that as it waterfalls through, that does take time for that to develop.

And like I said, we started to see that last year, see it this year. So it’s just more of a structural change as the camera content grows Okay. As a percentage of the total.

John Vin, Analyst, KeyBanc Capital Markets: Okay. Know, Carlos, this question for you. You know, Mixed Signal has been truly a success story for you guys. You’ve done extremely well. You’ve seen a lot of growth in camera controllers.

It seems like historically the drivers have been increasing attach rates, maybe higher ASPs as you migrate to latest generation camera controllers. When we think about growth going forward, do you still see growth driven in camera controllers? And what are the dynamics that you expect to drive that growth?

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Yes. I mean I think we expect to see what’s been happening since we started this business about five years ago, we expect to see that continue. We’re shipping three different generations of products, the latest of which has higher functionality, higher performance, a 6x increase in processing capability, and the customers continue to take advantage of that. So I think we see that in the road map. So on a device to device basis, we see content expansion.

And then obviously, we see the attach rate and the kind of flow down through the portfolio to be kind of drivers of growth. And the road map, like I said, is very robust. It’s super exciting. And the customer is obviously still investing quite a bit in innovation in this particular application, which is good for us. And like that partnership is super strong both on the hardware side as we, again, are developing multiple products that further performance capabilities, channel counts, processing, etcetera, coupled with the algorithmic kind of firmware work and kind of the partnership we’ve got working with them to ultimately net out to slow and steady kind of expansion of the content opportunity and therefore the revenue over time.

Great.

John Vin, Analyst, KeyBanc Capital Markets: Can you talk about what your strategy to expand HPMS content beyond camera controllers and smartphones is?

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Yes, sure. So I mean, obviously, we started by moving into haptics and then camera control. Power conversion and control was another big thing. We’re super excited about the road map for the power conversion and control IC, especially with AI use cases showing up more and more and that driving kind of peak power demands on the system. You know, the function of that power conversion and control IC is really to be able to sit between the battery and the system and deal with peak power demands such that the downstream performance of the actual device is not compromised.

Obviously, a brownout or, you know, the phone not being able to handle the power demands is not good for the user experience. And so we’re trying to build on that capability, not just in terms of that like system level know how but also application of that, including beyond, you know, beyond the current application in in phones. And then there’s certainly a whole lot of know how we’ve built up in terms of sitting between the battery and the system and looking at all the different requirements around safety for the battery, health of the battery, how you intelligently charge and discharge that battery and subsequently deliver power into the system. And that plays really well into our strengths around like ultra low power sensing, the data conversion for, again, measuring and monitoring what’s happening both with the battery and the downstream power delivery. And so much like a lot of the custom things we do, we have to build and prove that IP out in silicon before, you know, before really engaging on a custom product.

And so we’ve working on that in a variety of areas in this kind of battery and power kind of compute space. And so it’s definitely a long term endeavor. And so we’re still super excited with, you know, that content expansion opportunity in camera and then building beyond that with the kind of battery and power sensing and the battery kind of power conversion control IC. And so that strategy is deliberate. It’s long term in nature because we do have to build out the IP ahead of time and build it in silicon to kind of prove it works to kind of derisk and kind of jointly tie up with the customer in terms of how we do a custom product.

So that’s something we’re working on quite actively.

John Vin, Analyst, KeyBanc Capital Markets: Great. Maybe just related to that, you know, I think it’s the AI smartphone replacement opportunity. I think it’s been a little bit underwhelming right now, but obviously there are certain requirements around the concept of an AI smartphone. Is that something that you see kind of playing into kind of the increasing requirements around battery and power management and things like that?

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Yes, certainly. I mean, we think we’re well positioned. I mean, obviously, we’ve launched and ramped new devices last fall, including a 22 nanometer codec, which brought incremental value and covers off not just audio and kind of voice input capabilities, but other sensor inputs as well. And we think that’s positioned really well to capitalize on new use cases and interfaces as it relates to AI. So we’re certainly excited to kind of support that and look forward to, you know, kind of those consumer experiences just getting better and better.

And certainly, in the power and battery space, as I was just talking about, there’s a lot of demands on the system and peak power. And just frankly, the amount of power consumed by doing these kind of on device, you know, processing for AI kind of use cases will just put more demands on battery life for the phone, which kind of plays again to our strengths around how do you optimize power delivery, how do you manage battery life efficiently. And, you know, for our low power signal processing IP in that portfolio, it plays really well into our strengths to kind of continue to capitalize on that as AI grows.

John Vin, Analyst, KeyBanc Capital Markets: That’s great. Maybe we can talk about the PC opportunity. That’s been another emerging success story for you guys. I think you’ve done tens of millions this year and are on track to kind of double it in the next year. It looks like if you look at the two platforms between mobile and PCs, you’ve been able to leverage the fact that you’re selling similar products into both platforms, amplifiers, haptics, codecs.

Can you just talk through what you see as maybe the obvious similarities and maybe what are some of the differences when you look at these two different platforms?

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Well, certainly, kind of design trends and form factors are common. Thinner, lighter form factors. I mean, laptops are have been going through that kind of thinner and lighter form factor. And how do you do that without compromising, battery life and user experiences? You could argue that the laptop OEMs have maybe been slightly slower to to realize the importance of the audio and video or the audio and voice kind of user experiences.

And we’ve been shipping boosted amplifiers in in smartphones for over a decade, and that’s really just started in laptops. So for us, it’s, like, an exciting, like, greenfield opportunity, you know, reinforced with, like, actual, like, OEM customers, like, pulling on we just need better audio and voice solutions. So there’s a lot of similarity in terms of the under the underpinning kind of acoustic and audio challenges to deliver a really good audio experience. You know, laptop speakers are on the order of twice as big as a smartphone speaker, but there’s still a whole host of design and systematic kind of challenges around how do you make what’s fundamentally really small speakers sound good. And frankly speaking, from our perspective, the solutions available to customers were just insufficient relative to delivering that experience.

And we view that as like continuing to just move forward and customers won’t go backwards, right? I mean, especially when they’re all competing for, you know, market share and see other, you know, competitive brands doing certain things in audio and getting really favorable reviews and and feedback based on technology we’re enabling, we see that to just accelerate. And to the point on the last question around AI, like voice as an interface and like that context awareness and user experience with voice as an interface to, you know, as as one alternative to a keyboard, we just think that accelerates and drives an expansion of content opportunity for Cirrus that’s super exciting. So certainly, there’s a lot of commonality from that perspective. You know, the design process and the design, you know, kind of well, the design process is different just with ODMs and OEMs and the kind of reliance on Intel and AMD and chipset partners and the emergence of ARM.

So there’s definitely complexity in the ecosystem that’s different from smartphones. But the underpinning technology kind of commonality is really strong and the customer pull is great.

John Vin, Analyst, KeyBanc Capital Markets: That’s great. Maybe we could take a step back. As you know, if you look at the PC notebook opportunity, you kind of displace kind of a longtime entrenched incumbent who’s Taiwan company who’s very focused on cost optimization. Maybe just talk about how you were able to kind of come in and displace such a well entrenched incumbent there.

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Yeah. I mean, they are well entrenched incumbents shipping a variety of different technologies, of which audio is obviously one of them. You know, to my point, I think the bar has been raised. And I think there’s certain brands in the market that spend a lot on audio, and that shines through in that user experience. And a lot of customers were getting kind of left behind in terms of that benchmark for audio and voice, exacerbated by, you know, people working remotely in Zoom and Webex and kind of other, you know, things that we experienced during, you know, during the pandemic.

And again, there’s really it’s hard to go backwards. And so we look at it as not like what does your chip cost versus the, you know, the incumbents, but what does the total cost of ownership look like for a company to do business with Cirrus? So, you know, it’s the chip, but it’s also, you the algorithms and the audio and voice software that we can embed on our chip that can eliminate royalties of software and other branded things. When you consider the quality, the reliability, the return rates, and just what that means for OEMs dealing with returns on, like, bad quality or, you know, vibrations and mechanical rattle induced kind of distortions and people just return them like that. Total cost of ownership coupled with, you know, our ability to enable customers to use, you know, cheaper transducers, cheaper speakers with our amplifiers.

When you net all that out and look at the total cost of ownership, we actually think it’s a win for customers. And with that, they also get premium audio and voice experiences that we feel are unmatched in the market.

John Vin, Analyst, KeyBanc Capital Markets: On the last call, talked about kind of a milestone about being able to penetrate into the mainstream notebook market, right, which you felt was a big win for you. Your gross margins continue to tick up. Can you just talk about the differences and what you did to kind of get to that next milestone of going mainstream versus high performance high end?

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Yes. Mean certainly we’ve started at the top. And you know, again, I think it partly to do with customers wanting and needing that same level of experience and audio performance across their portfolio to not lose pace with other brands. And obviously, we’ve also, you know, purpose we’ve repurposed parts that were built for smartphones, and then we’ve also introduced multiple new families of codecs and amplifiers that are specifically built around laptops. And that obviously includes, you know, kind of broadening the portfolio to offer solutions that are more tailored for mainstream applications.

So a slightly lower cost point, different configurations and different optionality for integrated AMs versus external boosted AMs. So again, I think it’s a statement of broadening the portfolio, of being mindful and super close and collaborative with customers on what they can afford and where they’re willing to spend money and also contemplating the total cost of ownership, like, okay, we can build you this amplifier. You can use a cheaper speaker. And like the total cost for the mainstream actually makes sense. And so we’ve been able to win on that.

And then it’s just close collaboration and close road mapping alignment with customers to really dial in budgets and functionality and capabilities, again, with an aim to deliver really premium experiences not just in the flagship but also in kind of the mainstream commercial and consumer side of the notebook space.

John Vin, Analyst, KeyBanc Capital Markets: Great. Are there any questions? Great. Maybe another question for you is if you think about the market for the PC notebook market, obviously, the entrenching comment, you’re probably not going to want to go after the kind of low end of the market. So can you talk about just what percentage of the what part of the PC note market is actually addressable for you guys?

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Yes. I mean we view it as kind of like the mainstream in app. So we don’t really target the $600 kind of retail price point and below, which roughly is maybe 120,000,000 laptops, give or take. And certainly, as I mentioned, we’ve been building a portfolio of products on codecs and amplifiers for audio and voice. We’ve been building out that portfolio to address a bigger part of the market.

And again, we’re seeing content expansion opportunities already in the mainstream, kind of building beyond the codec to include amplifiers. And so certainly the baseline is audio and voice. But, you know, beyond that, we’re shipping haptics drivers into really premium kind of flagship models. And we’ve got some power components as well for power delivery, also in some of the AI models. So when you put that all together, it’s like roughly 1,000,000,000 unit or $1,000,000,000, Sam, for Cirrus.

And so again, we’ve started basically from zero. So, you know, we’re seeing a lot of good design momentum and like starting to get new products and filling out the portfolio to address these different technology areas, both audio and HPMS. So yes, I mean, 1,000,000,000 market in total for us, it’s quite good.

John Vin, Analyst, KeyBanc Capital Markets: Very nice. Can you talk about the CommPal partnership and how that’s helping you scale your business?

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Yes. I mean, as I mentioned earlier in terms of like cost of ownership of using a company like Cirrus, the CommPal is a new collaboration really aiming you know, kind of to deal with systemic kind of challenges around audibility of distortion things induced typically by mechanical rattle. So there’s lot of moving pieces in a laptop, you know, the keyboard a variety of different subsystems. And those over time or even on the production line can introduce vibrations and that’ll distort the audio signal. And that’ll not only cause, you know, a bad user experience, but it can be variable across the manufacturing line, which can result in the same product having a different user experience.

And often, it’s not really optimized. And so we’ve used machine learning techniques and AI to model and predict where these frequencies are going to be in terms of mechanical rattle distortion, and we can automatically kind of tune that out to, again, have a uniform and consistent user experience across the manufacturing process and kind of up and down the portfolio. And then over time, we expect to continue expanding on that. So it’s still early in terms of that collaborations, really not about scaling the business as much as it is about scaling and optimizing the user experience across the manufacturing process and ultimately kind of reducing the total cost of ownership and not compromise on audio. Right.

John Vin, Analyst, KeyBanc Capital Markets: Hey, Jeff, your long term gross margin target is 49 percent to 51%. You’ve been running meaningfully above it for several quarters now. Is this sustainable? What’s been driving kind of that outperformance? And is there potentially an upward bias to your long term gross margin targets?

Jeff Willard, CFO, Cirrus Logic: Yes. I think a couple of things driving the gross margin. As we have different product mix during a quarter, can be the timing of when we introduce new products and then also the timing of some of our supply chain cost reductions. And so that can cause us to move sort of quarter to quarter. I think the other thing we look at for long term, what would be some of the growth of other diversification efforts that would cause us to change that long term goal, Those are sort of the elements we’re looking at.

But structurally, we’re very comfortable with where we sit today with being able to sustain the gross margin target we’ve given.

John Vin, Analyst, KeyBanc Capital Markets: Okay. Does HPMS just on average have an accretive gross margin profile in general for your business?

Jeff Willard, CFO, Cirrus Logic: Yes. It’s difficult for us to say that. We don’t necessarily look at it on an audio and HPMS from a gross margin target. We’re more looking at the blended portfolio and making sure that the places we’re at and the segments we’re at are fitting in that long term target.

John Vin, Analyst, KeyBanc Capital Markets: Okay. Maybe switching to operating margins. You’ve been running kind of in the mid-20s over the last several years. What’s kind of the right target that you’re looking at? And how do you kind of balance that against making the necessary investments in R and D to continue to drive growth?

Jeff Willard, CFO, Cirrus Logic: Yes. When we look at that, we’re obviously seeing where can we invest and some of these opportunities that Karl has talked about. How can we balance our resources internally to make sure that we are hitting the different development cycles we need for all of these different segments. Right now, we’re comfortable with where our footprint is, but we will continue to look at different opportunities. And if we see something that is very attractive and it requires us to increase investment, we’ll do that.

So we’re really not necessarily looking at trying to hit a target as much as we’re trying to make sure that we have real operational discipline into where we’re investing our dollars and balancing that with the opportunities we see. But with the end goal of, hey, we’re trying to grow the company, we’re trying to grow revenue, we’re trying to grow long term profit. And if we have to balance that or invest more in a quarter, we’re certainly willing to do that. Great.

John Vin, Analyst, KeyBanc Capital Markets: Hey, Jeff, you come in with an extensive background in M and A. I’m just wondering if you could just talk about kind of your framework in terms of how you’re looking at targets at Cirrus Logic, maybe talk about scale. Are you looking at tuck ins or larger sized deals? And is this something that you’ve been asked to maybe take a closer look at?

Jeff Willard, CFO, Cirrus Logic: Yes. We are certainly looking at some M and A opportunities. So not necessarily trying to categorize that as a tuck in or a larger size. We’ll look at both. What we’re really looking for are combinations where we think we can really grow value, right, really have some value accretion.

Certainly, in the segments that we’re going into, as we’re trying to diversify away from mobile, those are more of a target of more of a focus of where we’re looking, how can we accelerate that, but really looking at where can our IP, which we’re very proud of, where can we get some synergies to accelerate that or where can our IP accelerate a potential acquisition?

John Vin, Analyst, KeyBanc Capital Markets: Great. I get this question a lot. Just when you guys think strategically about customer concentration, How do you guys think about that? Is that a goal of yours to diversify away from that longer term or are you just focused on doing everything possible to grow revenues and to service that customer concentration to your best of your ability?

Jeff Willard, CFO, Cirrus Logic: We’d like to think those aren’t mutually exclusive. So yes, I wouldn’t call it necessarily thinking of it as customer concentration, maybe as mobile concentration. And yes, we are actively trying to diversify that away. I mean Carl’s talked about certainly the PC opportunity that’s been exciting for us. We are not running away from that.

And if we can grow the mobile market, we’ll continue to do that. So it’s not an and or for us. It’s both. But yes, diversification away from that segment is certainly a goal of ours.

John Vin, Analyst, KeyBanc Capital Markets: Great. Maybe just to follow-up on that. Historically, the Android markets, you’ve had kind of some fits and starts there. How are you looking at the Android market these days? Is that still going be something you’re going to be focusing on growing?

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Yes. I think we’ve actually pulled back in terms of investments in Android for the purpose of it not really representing a good exciting growth market for us. Certainly, we’ve talked about PC. We’ve talked about incubating other businesses beyond smartphones as like really important exciting long term options for us. We certainly still have competitive products for audio and haptics in the Android space.

But it’s just, you know, as a total market, especially with a big chunk of the customers residing in China and not just having a bit of risk inherently with the geopolitical kind of climate as it is, We’re opportunistically selling what we have, but not really focusing the R and D investments on Android so that we can invest in, know, again, just expanding the HPMS content, but also building businesses beyond smartphones, especially in markets that have a bigger growth factor that’s exciting for us long term.

John Vin, Analyst, KeyBanc Capital Markets: Great. Speaking about other markets, I think you recently talked about ramping some timing parts into the automotive market. That’s a very kind of different animal compared to what you’re shipping into. Just talk about the decision to kind of go after automotive and how big could that opportunity be over the next several years?

Kala Birligi, VP of Mixed Signal, Cirrus Logic: I mean, Cirrus has actually shipped into automotive systems for the better part of two decades, primarily with kind of traditional data converter products for audio applications. We’ve also shipped timing products on Ethernet based systems, you know, through collaboration with other chipset vendors. And certainly, you know, the core of that being audio related, I think we have a lot of kind of brand permission, if you will, to kind of reengage. And we certainly see, you know, the in cabin experience for entertainment, tactile experiences, so audio, voice, kind of touch and sensing and haptic, all that part of the in cabin experience as being pretty disrupted right now with the kind of transition over time to zonal architectures and basically having, you know, kind of smartphones on wheels as some people like to call it. So we think it’s an interesting long term option for us and we think there’s a lot of interesting technology in audio and voice and haptics and sensing.

Similar to these other markets, that are very relevant to the automotive space, you know, the timing product, I think, is capitalizing on that as well. So it’s replaced an older device that, was built in a process node that has gone end of life. And so we’ve updated that product. We’ve added functionality kind of increase the application of it. And we’re now already shipping that device into, you know, into multiple kind of OEMs in the kind of premium audio space or the the premium kind of car space.

So, again, it’s definitely a long term endeavor, but the underpinning technology we’ve got for the in cabin experience and the timing stuff that’ll just get more prevalent as these zonal architectures take root is exciting kind of long term option for us to build a new market.

John Vin, Analyst, KeyBanc Capital Markets: Great. Looks like we’re out of time.

Kala Birligi, VP of Mixed Signal, Cirrus Logic: Thanks, guys. Okay. Thanks, John. Thanks.

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