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The semiconductor industry has taken a whiplash during the pandemic, with a few years of parts shortages causing product delays, inflation and long waits to buy products. We are now in a global economic downturn that could turn things around and reduce the deficit.
Amid this turmoil, Synaptics has made progress with improvements in chips that go into a wide variety of products, including PC monitors, virtual reality headsets, and cars. The touch sensor products fit into almost anything you control with a finger touch. And more of those products are being infused with artificial intelligence.
Using AI at the edge, Synaptics image sensors can detect if someone has fallen. The company’s chips enable wireless docking between monitors and laptops. It makes sensors that detect environments for VR headsets and components for universal wired docking for laptops.
One of the things it’s helping make happen is the new wireless docking monitors that will be on display at CES, the major consumer electronics show in Las Vegas, in early January. I spoke with Michael Hurlston, CEO of Synaptics, in an interview during a demo day at the company’s headquarters in San Jose, California.
Here is an edited transcript of our interview.
VentureBeat: Do you see much change in the market in terms of the semiconductor shortage?
Michael Hurlston: Very sure, yes. You’ve been in the business for a long time. At the end of last year, the last calendar year, we were in a battle for chips like everyone else. The shortage and problem of the semiconductor supply chain is well documented. We were in the middle of that. Probably towards the summer, maybe towards the end of the summer, we started to see significant easing, and in the fall, very significant easing. A lot of inventory has been built up. We’ll have to work through that. It’s been relatively easy for us to get stock now. Not perfect. There are still some areas where there are bubbles. But overall, I’d say the supply chain crunch is mostly over.
VentureBeat: There’s a good side to products now going out to end users. The more difficult side is that they may not have the same prices.
Hurlston: Prices are a conversation. Again, I’d say it’s generally held up. The bigger problem is, the chip industry as a whole, just in round numbers as an example, let’s say it takes a thousand parts to make a phone or a PC. The PC guys, the phone guys had 998. They were looking for two. But they kept buying the 998, thinking the two would come in. What has happened in recent months, now the question is at least equal. They are on many sets of 998 components. If they get the two they are building but they don’t need more of the 998. That inventory issue will take quite some time to resolve on its own as they get the final components to complete the kit and a Product. In most cases, we’re on the side of the 998. There’s a pretty big inventory problem that I think needs to be resolved.
VentureBeat: Does this tell us we still have a lot of old-fashioned problems? Stock is one of them.
Hurlston: Inventory is a pretty big deal. Everyone needed better tools to understand what was being shipped and what was ultimately being consumed. We were asked time and time again by our investment analysts. Will there be double orders? Do people take too much? I don’t know if we had the tools we would need to say yes or no. The truth is it’s a combination of things. First, the demand has certainly decreased a little bit. But certainly more was shipped than was ultimately necessary.
VentureBeat: I tried that new Meta headset, the Meta Quest Pro. It contains about 10 cameras. It has all those extra sensors that the others didn’t have. It feels like that’s a trend that Synaptics should love, this need for more sensors.
Hurlston: It is interesting. My concern right now is that we’re going to be moving back to a capacity-constrained environment in a faster time than ever before. The macro trends are still absolutely there. There’s more semiconductor content going into more things than ever before. Your example is a good example. The Meta glasses have a huge number of sensors. That’s great for us. We do a lot of these sensors. There is a huge amount of display content. We make the display drivers.
A lot of that, as you know, is at back nodes. The Qualcomm processor that powers the Meta glasses is in an advanced 7nm process. But the rest of the goodies, the sensors, they don’t have to be, and they never will. The capacitance problem, the capacitance building at 28nm and above, no one has ever built the capacitance. The only thing that has changed is that demand has fallen. I’m concerned that we’ll be right back in a limited capacity environment once this inventory situation evens out.
VentureBeat: Do you have a dog in the fray when it comes to ARM-related matters? Especially when it comes to RISC-V.
Hurlston: Not really. We use ARM. We also use RISC-V. We have a pretty good experience with RISC-V. One of the interesting things is that our touch devices are on our own homegrown processor. We feel that as customers become more comfortable with third-party processors, we’re moving away from that. Right now we are in an evaluation between the two. We’d probably go with RISC-V instead of ARM simply because of cost. ARM is very good, but the cost is quite high. In many cases, RISC-V now has a competing product that we can use.
VentureBeat: The interesting pitch for RISC-V is that it is geopolitically neutral. The different nations of the world are open to it.
Hurlston: I’d say ARM could make that argument as well. They are relatively equally geopolitically neutral. I’m not sure if that’s necessarily an advantage. But I think the big problem is cost. ARM has become a de facto standard in many cases, and they know it. Their cost is probably a little higher than I’d like to see.
VentureBeat: In terms of your technology here, is there a common thread that you see between some of these CES products, a common theme of Synaptics?
Hurlston: We have a lot of different technologies, as you’ve seen. Lots of different end markets, as you’ve seen. We play on the PC. We play with VR glasses. We play in the car. There are many different things we do. It is our job to bring them together in platforms. That’s what we’re trying to do. Areas of focus for us where we bring multiple pieces of Synaptics technology include VR headsets. We are excited about that. Automotive. We can bring in different parts of our technology there.
And then the clean workspace. You saw a demo about wireless docking stations there. We think we can make wireless monitors, which has been tried a hundred times. I know you know that. The difference we offer is that we have a proprietary video compression algorithm that can generate very low latency and enough compression to allow you to do mouse movements, which is of course required on a monitor, while at the same time dealing with high definition video. We think this ultimately catalyzes the idea of the wireless monitor. We’re going to break into that clean workspace using two or three different technologies that we have: Wi-Fi, video compression, video rendering. We have collected a war chest full of technologies. Now, as we move forward in the next few years, we’ll try to merge them into a number of platforms or initiatives that make things more sense.
VentureBeat: How many people are here right now?
Hurlston: Here it is about 400. The whole company is about 1,800.
VentureBeat: Are you back to work in the office?
Hurlston: For the largest part. It’s been interesting. We even got people back to the office quickly. We were back in May 2020. We had two months of working from home and then almost immediately got everyone back in, at least in a hybrid form. We’ve had fewer issues with the relapse you see in people coming back to the office. People got used to working remotely. We always had that — very quickly we got to a hybrid model. Now that’s been helpful in keeping that, not letting employees riot as we try to get them back to the office.
Remote work has its challenges. There are good things. You’ve been in the bay for a long time. Saving an hour of travel time each way is a good thing. But there have been some pretty significant drawbacks. The cooperation between the technicians is way below par in a remote situation, and just productivity in general. The average worker probably puts more time into it, but you have a mix of things. People have certainly used it as an opportunity to take more time away from the office than if they were actually in the building.
VentureBeat: Do you feel there’s a better outlook overall in terms of getting through some of these crazy years that we’ve seen? Are we going back to some kind of normal market apart from macroeconomics?
Hurlston: You know better than me. We had two crazy positive years where you had a huge shift in spending from services to goods. We were beneficiaries, because a lot of the work is remote — we have goodies that fit in headsets and docks and PCs. When people replicated their office environment at home, we got a nice uptick. We’re getting a little pick-me-up as things come back, but the reality is a lot of our business is consumer-facing. We’ve seen a pretty significant reset over the last few quarters. I would expect this to continue for a few more quarters where demand will be below average. It was two years better than average. It will be lighter than average for most of a year. Then we come to an equilibrium, barring another huge unforeseen event.
As I said before, my main concern is that we haven’t resolved the underlying capacity issues in the trailing edge foundry. If we get back to that equilibrium point, I think we’ll be in a constrained supply environment again.
We’re excited about the technologies for CES, though. Last year we went more or less for half. We had a booth and at the last minute everyone canceled. We broke down the booth. Then we had a room with a few chairs in it. This year I think it will be full steam ahead. This will all be replicated in our CES booth. We really like it when people drop by to have a look. I think our technology is ultimately performing quite well.
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