Synaptics at KeyBanc Forum: Strategic Push in Core IoT and Edge AI

Published 11/08/2025, 19:12
Synaptics at KeyBanc Forum: Strategic Push in Core IoT and Edge AI

On Monday, 11 August 2025, Synaptics Incorporated (NASDAQ:SYNA) participated in the KeyBanc Capital Markets Technology Leadership Forum. Led by CEO Rahul Patel and CFO Ken Rizvi, the discussion centered on Synaptics’ strategic shift towards core IoT and Edge AI capabilities. The company outlined both promising growth areas and current market challenges, positioning itself against larger competitors.

Key Takeaways

  • Synaptics aims to become a leader in core IoT, with over 50% growth in this area year-over-year.
  • Partnership with Google Research on AI accelerators sets Synaptics apart in the Edge AI space.
  • The company is exploring mergers and acquisitions to boost growth in IoT.
  • Synaptics targets a long-term gross margin of 57%, focusing on mix optimization.
  • Despite a sluggish automotive market, the enterprise sector is recovering slowly.

Financial Results

  • Fiscal Year 2025 saw a 12% increase in revenue.
  • Earnings per share surged by 61%.
  • Core IoT business grew over 50% year-over-year.
  • Inventory levels have returned to pre-COVID standards.
  • Strong visibility for the next three months, with reasonable outlook for six months.

Operational Updates

  • Synaptics is investing heavily in R&D for core IoT expansion.
  • The partnership with Google Research enhances Edge AI capabilities.
  • Design wins in video, camera vision, and audio processing span consumer to industrial applications.
  • Leveraging Broadcom’s licensing for superior wireless connectivity.
  • Developing the Astra processor architecture for AI at the edge.

Future Outlook

  • Synaptics plans to continue growth in core IoT with Edge AI applications through 2028 and beyond.
  • Potential growth in the foldable phone market, with a 40-50 million unit opportunity annually.
  • Anticipating benefits from a PC refresh cycle, with 400 million PCs due for upgrades.
  • Return to office trends may drive demand for upgraded workstations and conference systems.

Q&A Highlights

  • Synaptics differentiates from Qualcomm and MediaTek by focusing on power-efficient, cost-effective Edge AI solutions.
  • M&A strategy focuses on accelerating IoT growth and leveraging the balance sheet strategically.
  • Despite sluggish automotive markets, Synaptics sees potential in enterprise recovery and PC touch market growth.

In conclusion, Synaptics is confidently navigating market challenges with a focus on core IoT and Edge AI. For more details, please refer to the full transcript below.

Full transcript - KeyBanc Capital Markets Technology Leadership Forum:

John Vin, Analyst, KeyBanc Capital Markets: morning, everybody. My name is John Vin. I cover SMEs here at KeyBanc Capital Markets. We’re pleased to have Synaptics at a conference with us. We’ve got Rahul Patel, newly appointed CEO and Ken Rizvi, CFO.

Thanks for joining, guys.

Ken Rizvi, CFO, Synaptics: Thanks for having us, John.

Rahul Patel, CEO, Synaptics: Thanks, Really

Ken Rizvi, CFO, Synaptics: excited to be here.

John Vin, Analyst, KeyBanc Capital Markets: Hey, Raul, I’d love to start with you. You know, you’ve been CEO of Synaptics for about three months now. Just wondering if you could take a minute and just share with us what your vision and strategy for Synaptics is now that you’ve been in the seat for a while?

Rahul Patel, CEO, Synaptics: Yes. I think it’s I feel very fortunate to be the CEO of Synaptics. It’s a company that is at a cusp of becoming a formidable core IoT player based on the assets it has in its portfolio. Clearly, a company that has been in the business for forty years, four decades. There are not too many semis that have gone through a forty year cycle.

And the beauty about the company is it has reinvented itself many times successfully. And we are at a place in time where another round of repositioning the company is on the cards, especially in the core IoT space. And I find myself very fortunate to have had the experience that I’ve had in the industry in the past, bringing into Synaptics the ability to kind of play in the core IoT space. Having done what I’ve done at Qualcomm and prior to that at Broadcom in very similar spaces, it gives me a lot more confidence that Synaptics is going to do well in Core IoT. And so early returns, there’s no two ways about it, just about in my twelfth week.

However, core IoT definitely is very promising in Synaptics.

John Vin, Analyst, KeyBanc Capital Markets: Great. So it sounds like core IoT is going to be a focus for you. Being in the industry with you know, Qualcomm and in Broadcom, you probably have great visibility and understanding of all the different computing Wi Fi technologies across the spectrum. What’s your perspective around kind of the core Synaptics kind of WiFi Bluetooth assets and how it compares against the broader industry out there?

Rahul Patel, CEO, Synaptics: Great question again, John. I think Synaptics through its licensing arrangement with Broadcom, has the access to industry’s best in class wireless connectivity portfolio. Having said that, the portfolio, be it WiFi, Bluetooth, UWB or Thread, is not only positioned at a high performance end of the spectrum of products, but also with Synaptics’ focus into core IoT is going to deliver extremely low power, battery life, impressive performance products that are very key to having a scale on a core IoT SKU map basically in terms of total solutions that Synaptics is going to deliver along with its processor portfolio.

Ken Rizvi, CFO, Synaptics: And I think maybe that’s something we can highlight is on the processor side with Astra, one of the things that we’re super excited about was we talked about it on the last earnings call was the fact that we’re going to be sampling kind of this next gen architecture on the processor side that’s been built from the ground up really for the AI or AI at the edge And to be able to run these models natively at a very power efficient level and significant compute is really something we’re excited about. It’s just coming out now. And but we’ve been investing in this portfolio and product line here for the last eighteen months or so. And so that’s the excitement, not only this generation, but we have another platform that’s coming out next year that we’ll be talking about here over the next several months as well.

Rahul Patel, CEO, Synaptics: Yes. I think to further expand on that point, core IoT at Synaptics is the area that the company is going to go deeper into. However, the big differentiation is edge AI capability embedded in its processors. It’s not that it’s new to the plan. It has been part of the plan.

We are seeing a lot more adoption of our products that are in production right now with Edge AI. The big difference on the new set of products that Ken was indicating is that it has been developed in combination with Google Research, and it’s broadcasted. Earlier in the year, we publicly talked about this. The accelerators in combination with our neural processors, that IP was co developed in collaboration with Google Research. What that does is it allows us to very quickly and seamlessly benefit from the transformers that AI models will utilize.

And ultimately, many AI models will readily port on Synaptics’ platform. I don’t know of any other processor company at the edge that has a partnership that is publicly discussed or announced with the hyperscaler. And as we and if we believe, which I think I believe, is that the world of compute for AI is going to be splitting between the data centers and the edge because hybrid compute brings the benefit of lower power consumption for the inference, helps assure the privacy dimension, helps with latency equations because now the responsiveness is going be a lot better. And many other benefits come together with the hybrid compute. And working with a hyperscaler like Google is a huge differentiation for the Synaptics’ core IoT platform with a significant differentiation around core IoT with edge AI.

John Vin, Analyst, KeyBanc Capital Markets: Great. Maybe just a follow-up on Astra. Based on the engagements that you’ve had so far, what are kind of the initial maybe end markets or applications that you’re seeing the most interest from your customers from at this point?

Rahul Patel, CEO, Synaptics: I think the products that are in production right now are seeing tremendous amount of traction in video processing applications, be it over the top video processing in set boxes or OTD set top boxes to which are operator glass products to camera vision, audio processing applications. On the call on the earnings call last week, we discussed Marquee brand name, high fidelity wireless lead distributing audio speaker system solution supplier in the North American region, adopting Synaptics’ Astra processor, is an example. There are many other design wins that are in the portfolio. And so we are already seeing a wide traction of design wins, ranging from consumer to now initially even in the industrial applications with the Astra processor. And I think the pipeline is going to get even bigger and grow faster as we kind of launch the products with the IP that we have co developed with Google.

The beauty about the Google relationship is, and like Google does with many of its product categories from the smartphones to PCs, is they are more interested in not only developing first party products, which is Google branded products, but also enabling an ecosystem of third party products. Being the hardware platform of choice, the first to be partnering with Google out of the gate on this edge AI category, edge AI solutions for core IoT category, it gives us a material tailwind in the design win dimension, not only getting Google centric product but also third party products that would adopt Google Stack. So really excited about what’s coming in our revenue base today with the design wins that we have had in 2023, 2024 and portion of 2025 and also the new design wins that are going to fill our pipeline in 2026 and 2027 to deliver the continuing growth of core IoT with Edge AI processing applications in 2028 and beyond.

John Vin, Analyst, KeyBanc Capital Markets: Great. You’re clearly winning in Edge IoT with these new products. And obviously, you’re competing against companies, including Qualcomm, MediaTek, which have greater scale and ecosystem. How are you able to compete with these larger companies?

Rahul Patel, CEO, Synaptics: Yes. I think excellent question. I think what is not understood probably well in the marketplace is the likes of Qualcomm with their Snapdragon class of products. And I think MediaTek largely follows what Qualcomm does based on what I’ve seen. And so if you take them as a category of processing engines that are at the higher end of the spectrum, where, for example, in the last conference call, Qualcomm discussed their success in the AR category, right?

It’s largely driving highly immersive applications, a lot more video processing, power consumption being at a different level than what Synaptics’ products would be delivering at the core IoT applications in the Edge AI solutions. And so it’s a different class of products. We don’t compete in that category of products. However, we believe at the edge, 90% of the applications would benefit running Synaptics class of processing engines versus a Snapdragon class of products if you are going to compare the implementations for the benefits of form factor and power and obviously cost. And so that’s where I think we are very different, and I don’t believe we compete.

John Vin, Analyst, KeyBanc Capital Markets: Great. Thanks for the clarification there. Ken, you’d been interim CEO for a while and I think you were one to kind of talk about Synaptics kind of going through this kind of broader base kind of recovery that we’ve been seeing over the last several quarters. Maybe just talk about just from a cycle perspective, what you’re seeing in the IoT business from a bookings backlog and inventory perspective? Sure.

Happy. Great question.

Ken Rizvi, CFO, Synaptics: And maybe I’ll just take a step back. If you look, right, we just finished our fiscal year 2025. And if you look at that, we saw actually great growth year over year for the overall business, about 12% growth on a year over year, 25% to fiscal twenty twenty four. But within that, I think you just mentioned it, is if you look at our core IoT business, that grew significantly, north of 50% growth on a year over year basis, whether you look at our 2025 results or you look at our Q4 over Q4 results. So we’re seeing great momentum in that particular portion of our business.

Part of that is driven by the wireless portfolio, but we’re seeing great traction on the processor side as well. And those things are continuing as we look into our Q1. If you take the midpoint of our guidance in Q1, you’ll see continued strong growth in that core IoT portfolio. That’s where we are investing as a company. If you look at not only the R and D resources, but if you look at the go to market engine, that’s where we’re making some of these incremental investments to be able to scale that business much further as we think about the next three to five years.

And if you look at that portfolio relative to the peer set and you look at it from a growth perspective or you look at it from the margin perspective, we feel like we’re in a class by ourselves relative to some of the smaller peers out there. And that’s the opportunity we have is to really show the spotlight on that business and to be able to showcase not only what we can deliver to customers in terms of solutions and products, but also what it means from a financial perspective. And then finally, just going back, if you look at the overall market dynamics, you know, one of the things we talked about on our earnings call was just the overall inventory levels. Now we don’t have all the visibility through the end customer, but as we look at the channel inventories, those are at pre COVID levels. So the channel inventory has leaned out, especially as we look out or look back over the last two years or so.

And so that’s a good sign in terms of where we are from a channel perspective and then where end demand is. And so now as we think about the next six months, the next twelve months, it’s really about end demand improving as well as our execution on the core IoT business.

Rahul Patel, CEO, Synaptics: Just to add to what Ken is saying, I think financially, we’ve thrown a lot of numbers out in terms of how fast we are growing in core IoT. Year over year last quarter, exiting the year, the strength, the momentum and what we can anticipate in Q1 fiscal Q1, the quarter that we are in for core IoT growth. I think all the numbers point to north of 50% growth. Having said that, I think the obvious question is what does this do to our earnings per share equation as a result? And I’ll point back to our fiscal twenty twenty five.

Our revenues grew 12%. Our earnings per share grew 61%. And so the difference for Synaptics in its offering to the marketplace is, yes, we’re going to focus on core IoT with not significant deviation from our plans for EPS growth, right? I think that’s where I think we’ll be different.

John Vin, Analyst, KeyBanc Capital Markets: Great. Just a follow-up for you, Ken. I think one of your peers has started talking about the recovery and they’re seeing another with a strong recovery, but they’re seeing it very heavy turns based because of the short lead times. And they’re indicating that because you’re not getting that same bookings out in the backlog that it’s kind of limiting some of the visibility a little bit further out into the back half of the year. Is that consistent with what you’re seeing in terms of just bookings trends versus

Ken Rizvi, CFO, Synaptics: the Yes. Shorter So we have typically, I would say, very good visibility three months out and reasonable visibility six months out. So if you look at our September, we had very healthy backlog coming in, requiring very limited turns for the September. And as we look at the December, yes, same point in time, a quarter ago, we’re building that backlog as the starting point and then the bookings are filling in at a healthy rate. And so that’s the typical visibility we have.

So I would say fantastic as we think about September and now starting to build into the December.

John Vin, Analyst, KeyBanc Capital Markets: Okay. Maybe we can pivot to enterprise and auto. Sure. You know, it sounds like, you know, it’s starting to recover a little bit, maybe not at the same pace of IoT, but how are you thinking about just enterprise and the recovery there over the next several quarters?

Ken Rizvi, CFO, Synaptics: Yes. So when we think about the enterprise auto, maybe I’ll bifurcate it into the two markets here. On the automotive side, what we’ve said and it’s no different than I think what we’ve communicated over the last couple of quarters is the automotive market for us still remains very sluggish. The enterprise market over the last twelve months actually has continued to grow. So within that enterprise and automotive market in terms of what we’re reporting, I would say automotive has declined over that twelve month period, while the enterprise market has had this recovery at a slow pace, but a reasonable recovery over that period.

I think the one thing that we have some secular drivers and cyclical drivers, but as I look at some of the cyclical drivers that we have as potential tailwinds to the business is really around that enterprise space where, you know, we have very strong positions or franchise positions in that PC and enterprise space. And we haven’t yet seen this PC refresh cycle, right? That’s not what we’re embedding into our September guide nor are we necessarily anticipating that as we think about December. But if you look at the last refresh, it was really in that 2021 period and there’s something like 400,000,000 PCs out there that need to get refreshed. And so whether it’s Windows 10, whether it’s AIPCs, at some point in time here, we would expect that refresh to occur.

That’s a net cyclical benefit to Synaptics. The other piece that is also out there is the RTO, return to office. And, you know, in the valley we’re starting to see it with a lot of folks coming back into the office. We’re experiencing it at Synaptics as well where we’re starting to upgrade the work stations or upgrade the conference systems. And those things are also net tailwinds as we think about the next twelve plus months.

Great.

Rahul Patel, CEO, Synaptics: Yes. I think just to add to what Ken is saying, I think you asked about enterprise, right? Our market share in PC in the touch category is growing. So as and when the market starts to see a refresh, we’ll see a bigger share translate into a higher revenue base basically. Mobile Touch, you didn’t bring it up, but that market as well is in a place where it’s going to see a pull on foldables.

If you all believe that at some point, the company in Cupertino is going to launch a foldable phone, the rumor is 2027, the category potentially will see an uptick. Obviously, it’s coming off on a very small base. But even 5% of the smartphone marketplace translates into, give or take, some 40,000,000, 50,000,000 units a year. Synaptics is the touch choice in premium class of products. In foldables, you have now the opportunity to sell two touch products versus one.

And so all of a sudden, that’s 100,000,000 unit opportunity for Synaptics. And so I think there are these other factors in our established businesses that will continue to kind of work in our favor as the market turns in those directions that are PC as well as in mobile, right? And near term, despite having not significant contribution on the growth from mobile touch and enterprise and auto, the growth continues sequentially on the total revenue base, courtesy of strong growth in core IoT. So overall, with the mix that we have, we feel very good against some of the headwinds that the market may experience. I’m sure we may be not immune completely to all the headwinds, but the categories that we are in puts us in a good place from being different than the marketplace.

John Vin, Analyst, KeyBanc Capital Markets: Great. Are there any questions? Rahul, how are you thinking about M and A at this point? You know, your predecessor was pretty active on the M and A front. What’s your philosophy in regards to acquisitions?

Rahul Patel, CEO, Synaptics: Yes. I think look, I think the company is, in my opinion, primed to build solutions. Today, if you look at the company, like many other companies, they are arms dealer. If you want a processor, we’ll sell a processor. If you want wireless connectivity, we’ll sell a wireless connectivity solution.

If you want something in analog mixed signal capability, like a touch or fingerprint or security solution, we’ll sell that. The opportunity for us to also venture into the realm of building out solutions that are targeted towards core IoT marketplaces, for example, a full PCB with processor, wireless connectivity and an interface to the physical world. That may be an appliance solution. To a solution that may be a robotic arm that has the ability to do tactile sensing, process or capture some vision information, process, machine learn with low latency, take an action, wirelessly connect to the cloud or the server where all this information is going to get stored. I mean you can see the landscape.

And that is where Synaptics is going to go, become a bigger core IoT player for some of these marketplace and for the bank that we from a buck point of view that we invest, get a bigger bank in the process, right? This cost of sales goes down. The stickiness at the end customer goes down. Our opportunity to kind of build on our software that integrates all of these products goes up. Our ability to reduce our customers’ engineering costs goes down.

And so if you look at these aspects, they all will support the larger direction of core IoT. And going back to your question, anything that accelerates our growth in that area is going to be on the table for consideration. And we are going to be very strategic. We are going to be focused in doing the right thing and utilize our balance sheet to fuel the growth in core IoT.

John Vin, Analyst, KeyBanc Capital Markets: Great. Ken, just a question for you on gross margins. Is 57% still the right kind of long term target at this point?

Ken Rizvi, CFO, Synaptics: Yes. So as we look out in time, that still is a very reasonable target, John. And part of that, if you look at where we are today, part of it’s going be driven by mix, right, and mix within mix. I think we’ve talked about in the past, We have a broad range of products in our portfolio and our ability in terms of the market uptake of that mix can help our margin profile. And then longer term, as we think about things like solutions that Rahul just mentioned, I think that provides an avenue really to differentiate with our customer set not only in terms of the visibility and longevity of those products, but also should equate to a nice or a higher margin profile over a longer period of time.

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

Ken Rizvi, CFO, Synaptics: All right. Appreciate

Rahul Patel, CEO, Synaptics: Thanks, it, John.

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