Synaptics banks on mobile touchscreen

SANTA CLARA, USA: Synaptics Inc introduced two new touchscreens as it seeks to capitalize on the growing use of the technology, spurred by the popularity of smartphones such as Apple Inc's iPhone.

Chief operating officer Tom Tiernan told in an interview that he expects 20 percent of the more than 1 billion cellphones sold worldwide each year to have touchscreens in three to five years, up from less than one percent now.

The company -- whose technology is used by BlackBerry maker Research in Motion Ltd and HTC Corp, the maker of the G1 using Google Inc's Android software -- unveiled a touchscreen on Wednesday that can recognize up to 10 simultaneous finger touches and multi-finger gestures.

It also introduced a second, cheaper touchscreen with fewer capabilities.

Smartphones remain one of the tech sector's fastest-growing and most resilient markets, with cellphone makers from Samsung Electronics Co Ltd to LG Electronics Inc vying to crank out new models at a rapid pace.

But touchscreens gained popularity relatively recently, with the iPhone playing a key role in popularizing an interface that the likes of Research in Motion and Palm Inc now also employ widely.

"Over the past number of quarters, we've gone from a relatively low percent of our total business coming from touchscreens on handsets to, depending on the quarter, 40 or 50 percent," Tiernan said.

"We've been able to continue to grow at strong double digits because of the adoption of our latest technology, which is touchscreens in handsets." 

Growth Drivers

Synaptics is not in the iPhone or Apple notebooks, but is in some iPods, Oppenheimer & Co analyst Yair Reiner said.

"When it (Apple) got into the market, a very large percentage of the phone makers who wanted to come up with a similar solution came to Synaptics for that product," he said.

Competitors could not use Apple's suppliers because much of Apple's technology is developed in-house.

Worldwide mobile phone sales are forecast to dip about four percent to 1.17 billion units in 2009 before rebounding in 2010, but sales of smartphones are growing, according to research house Gartner. Global sales of mobile phones shrank 9.4 percent in the first quarter of 2009, which is the most recent data available.

But sales of smartphones grew 12.7 percent year on year in the same period.

Tiernan said Microsoft Corp's Windows 7, which features an array of new touch-screen functions, should drive additional growth for the company and said Synaptics would begin making touch-based buttons for white goods such as washing machines in the next six months.

Although Synaptics' quarterly earnings lagged in the third quarter, the company is projected to show consistent annual growth, according to Reuters Estimates. 

Synaptics declined to comment on its market share, but said it is the dominant player in the market. Competitors include Cypress Semiconductor Corp, Atmel Corp and Melfas.

Tiernan said Synaptics may consider acquisitions to propel future growth, particularly start-ups focused on improvements in touch or user interfaces, or usage models.

"We're aggressively scaling the company," he said. "We don't just constrain to touch. We are always scanning the environment."

"There are a lot of companies going bankrupt," he added. "It's not just buying a whole company. We could acquire intact teams or buy IP (intellectual property)."

Synaptics has doubled shipments to 600 million units and has doubled employees to 530 in the last two years.

The company is now focused on touchpads for laptop computers and touchscreens for mobile phones and sees its mobile business gaining speed.

"We think as a company that the adoption rate of this technology throughout the handset market over the course of the next few years can go to 20 percent, which on that huge of a market is big number," Tiernan added.