Synaptics Incorporated (SYNA)

Synaptics designs chips and the software that runs on them, for other companies to put inside their devices, and it sorts what it sells into three markets. Enterprise and Automotive covers PC touch pads, PC fingerprint sensors, video interface products and automotive products. Core IoT covers wireless connectivity and processors. Mobile covers touch and display for mobile phones. The wireless family spans Wi-Fi, Bluetooth, Bluetooth Low Energy, Zigbee, Thread, Matter, satellite positioning and other short-range radio for connected devices; the Astra family is a range of edge processors, from microprocessor units down to microcontrollers, built to run artificial intelligence work on the device itself instead of sending it away to a data center. 25262728

How it operates

Synaptics designs chips and the software that runs on them, for other companies to put inside their devices, and it sorts what it sells into three markets. Enterprise and Automotive covers PC touch pads, PC fingerprint sensors, video interface products and automotive products. Core IoT covers wireless connectivity and processors. Mobile covers touch and display for mobile phones. The wireless family spans Wi-Fi, Bluetooth, Bluetooth Low Energy, Zigbee, Thread, Matter, satellite positioning and other short-range radio for connected devices; the Astra family is a range of edge processors, from microprocessor units down to microcontrollers, built to run artificial intelligence work on the device itself instead of sending it away to a data center. 25262728

The older interface business is being pointed at new machines. Touch controllers, paired with the Astra processors, are sold for robots and humanoids, where the company says high-sensitivity sensing plus processing on the spot lets a machine read a texture or grip a delicate object. The video interface line, sold under the DisplayLink and DisplayPort names, connects devices to external screens and is broadening out of PC peripherals into humanoids, robotics and extended reality. In cars it sells integrated touch and display, local dimming and driver sensing. In phones it sells touch controllers for organic light emitting diode screens, behind more than 500 touch-related patents. 29303132

Its customers are the companies whose brand goes on the finished device, and it usually reaches them through their contract manufacturers, original design manufacturers and distributors, which it counts as customers too. The list is short. In fiscal 2026 one customer was 17 percent of revenue and another 11 percent, and two customers together made up 24 percent of what the company was owed by customers at the year end. Parts are designed into a platform rather than sold off a shelf, and the filing says that once a rival's part is designed in, changing suppliers costs enough time and money that a lost design can keep it out of that platform for years. 3334353637

Almost all of the money is billed in Asia. In fiscal 2026, by the billing location of its customers, China accounted for 536.8 million dollars of the 1,197.2 million total, Taiwan 363.4 million, Japan 128.3 million, South Korea 74.5 million, other countries 70.6 million and the United States 23.6 million. 38

Synaptics owns no factories. It is fabless, meaning it designs its chips and hires others to make them: outside wafer makers turn the designs into silicon, package and test houses cut and enclose the parts, and contract manufacturers either build them into modules or ship them straight on to customers. Those partners are predominantly Asia-based. The company gives them six-month rolling forecasts rather than long-term volume guarantees, though after the shortages of past years it signed long-term capacity and pricing agreements with certain suppliers. Its silicon wafers, substrates and packaging materials come from a limited number of foreign suppliers, and its unconditional purchase commitments at the end of fiscal 2026 came to 25.7 million dollars. 39404142

The specifics

What it owns is a library of designs rather than a plant. As of June 2026 it held 2,344 active patents and 661 pending applications worldwide, expiring between 2026 and 2046, covering touch sensing, voice processing, secure biometrics, display drivers, docks and adapters, video interfaces, wired and wireless connectivity, edge computing and computer vision. It leans on copyright and trade secret law for its firmware and software, and argues that the mix of chip, firmware, software and mechanical hardware in one product, together with customer-specific customization and long design cycles, is itself a barrier to copying. 4344

The filing names no competitor at all. It describes them by category instead: makers of microprocessors and microcontrollers, wireless connectivity providers, touch sensor and chip makers, providers of systems on modules and single board computers. It adds that China is actively promoting its own semiconductor industry with policy and investment, which along with trade barriers may restrict its participation in that market. Trade policy reaches it directly too: the filing notes that in January 2026 the US government put a 25 percent tariff on certain imported semiconductors and chips not intended for use in the United States, while saying its own direct tariff exposure remains limited. 45464748

Synaptics was incorporated in California in 1986 and re-incorporated in Delaware in 2002; its shares have been listed on Nasdaq under the symbol SYNA since January 29, 2002, and its financial year ends on the last Saturday in June. The purchase of Conexant Systems in fiscal 2018 came with an environmental bill: it agreed to take on the cleanup of a property Conexant once owned, and is still paying to investigate and remediate it. In January 2025 it paid 200.3 million dollars in cash for parts of Broadcom's Wi-Fi business for the internet of things, buying non-exclusive licenses to three developed products and the right to eight more technologies on Broadcom's roadmap, to be delivered at various dates through May 2028, and taking on some of Broadcom's staff. 1749505152

On June 25, 2026 Synaptics agreed to be bought by ON Semiconductor, which the filing calls onsemi. A subsidiary of onsemi merges into Synaptics, Synaptics survives as a wholly owned subsidiary, and each Synaptics share becomes the right to 1.350 onsemi shares. The board approved it unanimously, and the filing says the deal is expected to close in mid-2027, subject to a stockholder vote, the Hart-Scott-Rodino waiting period and approvals under other antitrust and foreign investment regimes. Either side may walk away if it is not done by June 25, 2027, a date that can be pushed back up to three times by three months. If Synaptics accepts a better offer or its board changes its recommendation it owes onsemi 235.0 million dollars; if the deal dies on regulators onsemi owes Synaptics 320.0 million. Until it closes, the company is restricted in what it can buy, sell, borrow and repurchase. 53545556575859

What drives growth, line by line

Revenue rose 11.4 percent in fiscal 2026 to 1,197.2 million dollars from 1,074.3 million, and the company credits Core IoT for most of the increase. 6061

Enterprise and Automotive product applications. The largest line: 641.1 million dollars, 53.5 percent of revenue, up 5.1 percent, or 31.0 million, on the year. This is the PC and car side of the business, with touch pads, fingerprint sensors, video interface products and automotive products in it. The filing puts the increase down to higher unit sales, which it measures at 1.9 percent, a better product mix, and more license revenue from certain of its intellectual property. 26626364

Core IoT product applications. The fastest growing line: 389.7 million dollars, 32.6 percent of revenue, up 43.1 percent, or 117.3 million, from 272.4 million the year before. It holds the wireless connectivity and processor products. The company sold more units, up 25.8 percent, at higher average selling prices, up 8.0 percent, on the mix of what it sold, and says the figure includes the contribution from the Broadcom transaction. 26626566

Mobile product applications. The one line that fell: 166.4 million dollars, 13.9 percent of revenue, down 13.2 percent from 191.8 million. It is touch and display for mobile phones. The filing puts the fall down to lower average selling prices, down 8.1 percent, and less license revenue from its intellectual property. 26626768

Gross margin held flat at 44.7 percent of revenue. Research and development rose 35.0 million dollars to 381.8 million, mostly pay in shares: an 18 million dollar increase tied to awards granted to the Broadcom employees who came across, plus 10.6 million more in personnel costs and 3.9 million in project costs. Selling, general and administrative rose 18.0 million to 198.3 million, including 15.6 million more of share-based compensation and 10.9 million of professional fees for the onsemi deal. Restructuring costs fell to 3.3 million from 16.9 million, severance for the most part. The operating loss narrowed to 67.1 million dollars from 94.1 million. 697071727361

The loss before tax was 79.4 million dollars. The year ended with a net loss of 490.8 million, and the difference is tax: a charge of 411.4 million dollars against a benefit of 65.7 million the year before, driven by 425.3 million of non-cash tax expense when the company set a full allowance against its US federal deferred tax assets, the future tax savings it had been carrying on the books, after three years of cumulative losses made it more likely than not that they would go unused. 72747561

Cash and cash equivalents ended fiscal 2026 at 442.5 million dollars against 391.5 million a year earlier, with operating activities generating 149.4 million; 254.8 million of that cash sat in foreign subsidiaries. Debt principal stood at 850.0 million dollars, maturing at various dates through December 2031, and 350.0 million was available and undrawn under a revolving credit facility. 76777879

What comes next, in the company's own words: the onsemi deal is expected to close in mid-2027; the company intends to keep building for edge and physical artificial intelligence, work it dates to 2017, when it began putting neural processing engines into its products; and it says average selling prices in its industry have historically declined and it expects that to continue. 558081

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What the desk infers Inferred

1. Inferred

   The geography table follows the invoice, not the end user: the money billed in China and Taiwan mostly buys parts that leave again inside somebody else's product, so the table measures where devices are assembled more than where they are used.

   Because

   • Revenue by region is reported on the billing location of the customer, and those customers are largely the contract manufacturers, original design manufacturers and distributors that build for the brands. 3438
   • China and Taiwan were billed 536.8 million and 363.4 million dollars of the 1,197.2 million total in fiscal 2026, while customers billed in the United States accounted for 23.6 million. 38
   • Its contract manufacturers and semiconductor fabricators are predominantly Asia-based organizations. 40
   • The filing warns that because contract manufacturers often serve the same brand, a drop in demand at that one brand can cut revenue across several customer accounts. 82
   Confidence 80 of 100Wrong if A disclosure of revenue by the location of end customers, or by final destination, that matches the billing-location table, or a statement that the customers billed in China and Taiwan sell the finished devices there.
2. Inferred

   Much of Core IoT's 117.3 million dollar increase came from the Wi-Fi products bought from Broadcom rather than from the connectivity business Synaptics already had.

   Because

   • The company says the increase was inclusive of the contribution from the Broadcom transaction, and that average selling prices rose 8.0 percent on the mix of products sold. 66
   • It paid 200.3 million dollars in cash for the assets and closed on January 30, 2025, part way through the previous financial year, so fiscal 2026 is the first full year to carry them. 51
   • Research and development costs rose partly on an 18 million dollar increase in share-based compensation for awards granted to the Broadcom employees onboarded during the third quarter of fiscal 2025, so the engineers came with the assets. 70
   • The company says the deal added Wi-Fi 8 combo, GPS, GNSS and Wi-Fi 7 combo products to its wireless roadmap. 83
   Confidence 65 of 100Wrong if A breakdown of Core IoT revenue showing the acquired Wi-Fi products were a small part of the increase, or a statement that the connectivity and processor lines Synaptics already had produced most of the 117.3 million.
3. Inferred

   Since the merger agreement the company has been run for the handover rather than for the next cycle: the top finance job is left unfilled, buybacks have stopped, and what it may acquire, sell, borrow or spend is capped by the agreement.

   Because

   • It decided not to search for a successor chief financial officer in light of the entry into the merger agreement, and the chief executive took on the principal financial officer role. 7
   • It suspended share repurchase activity after the merger was announced, in accordance with the terms of the agreement. 84
   • The agreement restricts material acquisitions, disposals of material assets, capital spending above set amounts, new equity and new debt until the deal closes. 59
   • Selling, general and administrative costs already carry 10.9 million dollars of professional fees for the pending merger. 71
   Confidence 80 of 100Wrong if A filing before the merger closes that appoints a permanent chief financial officer, resumes share repurchases, or announces a material acquisition.