Synaptics (SYNA, Financial) has received positive feedback for its collaboration with Google (GOOG, Financial) on edge AI, boosting the touchpad and fingerprint manufacturer as it starts 2025. Known for its laptop touchpads and smartphone touch display sensors, SYNA has shifted its focus to the IoT market, reducing its mobile industry exposure from 60% to IoT. This shift initially led to revenue growth and margin expansion. However, a global demand slowdown from the end of 2022 through the past two years led to inventory build-up, affecting revenue and profitability.
Despite efforts to recover, SYNA faced challenges resulting in a 30% correction in 2024. Management noted in November that inventory levels are still high, particularly in the video interface portfolio, which remains 40% below the normal run rate. The PC market, while stable, has not grown as expected.
IoT has been a bright spot for SYNA, with a 55% year-over-year revenue increase in Q1 (September). Encouraging trends have emerged, giving SYNA an optimistic outlook for 2025.
- The AI wave is expected to continue in 2025. SYNA’s collaboration with GOOG highlights its product appeal, bringing AI capabilities to edge devices at competitive prices. The partnership integrates GOOG’s machine learning core on SYNA’s Astra hardware, enhancing AI development for IoT devices like smart homes, appliances, wearables, and industrial systems.
- While the PC market didn’t grow as anticipated last year, SYNA is optimistic about 2025. The end-of-life for Windows 10 in October and new AI PCs suggest potential growth. Dell (DELL, Financial) noted in November that customers are aligning upgrade cycles with new AI PCs in the first half of 2025. SYNA benefits from increased PC sales due to its dominance in fingerprint sensors and touchpads.
- In the mobile sector, SYNA’s touch controllers, particularly in the premium Android market, have gained strength. SYNA is winning replacement designs and sees opportunities with some OEMs.
However, SYNA faces challenges in the automotive market, which deteriorated last quarter. The company warned that a broader market slowdown and delays in adopting new technologies could hinder recovery in 2025. Nevertheless, with IoT showing resilience, SYNA gaining market share in high-performance Wi-Fi, and enterprise product sales like PCs growing, SYNA is positioned for a comeback in 2025.