Synaptics Inc (SYNA) Q3 2021 Earnings Call Transcript

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Synaptics Inc (SYNA -1.96%)
Q3 2021 Earnings Call
May 6, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Thank you for standing by, and welcome to the Synaptics Third Quarter Fiscal Year 2021 Conference Call. [Operator Instructions]

Thank you. I would now like to hand the conference over to Jason Tsai. You may begin.

Jason Tsai -- Head of Investor Relations

Thank you, and good afternoon for joining us today on Synaptics' Third Quarter Fiscal 2021 Conference Call. My name is Jason Tsai. I am the Head of Investor Relations. With me on today's call are Michael Hurlston, our President and CEO; and Dean Butler, our CFO. This call is also being broadcast live over the web and can be accessed from the Investor Relations section of the company's website at synaptics.com. In addition to a supplemental slide presentation, we have also posted a copy of these prepared remarks on our Investor Relations website. The supplementary slides have also been furnished as an exhibit to our current report on Form eight-K filed with the SEC earlier today and add additional color to our financial results. In addition to the company's GAAP results, management will also provide supplementary results on a non-GAAP basis, which excludes share-based compensation, acquisition-related costs and certain other noncash or recurring or nonrecurring items.

Please refer to the press release issued after market close today for a detailed reconciliation of GAAP and non-GAAP results. Additionally, we would like to remind you that during the course of this conference call, Synaptics will make forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business, including our expectations regarding the potential impacts on our business of the COVID-19 pandemic. Although Synaptics believes our estimates and assumptions to be reasonable, they are subject to a number of risks and uncertainties beyond our control and may prove to be inaccurate. Synaptics cautions that actual results may differ materially from any future performance adjusted in the company's forward-looking statements.

We refer you to the company's current and periodic reports filed with the SEC, including the Synaptics' Form 10-K for the fiscal year ended June 27, 2020, for important risk factors that could cause actual results to differ materially from those contained in any forward-looking statement. Synaptics expressly disclaims any obligation to update this forward-looking information. I will now turn the call over to Michael.

Michael Hurlston -- President and Chief Executive Officer

Thanks, Jason, and welcome to today's call. We had a strong start to 2021, and I'm pleased with our execution this quarter. Revenue was in line with our guidance and our continuing efforts to drive IoT growth led to better than normal revenue seasonality. With IoT now established as our largest product group, profitability remains strong and contributed to another record quarter for non-GAAP gross margins. Coupled with disciplined spending, our non-GAAP net income and EPS results were at the high end of our guidance range. Since Dean and I joined Synaptics 1.5 years ago, we have made meaningful strides in improving the financial foundation of the company. Our non-GAAP gross margins and operating margins have increased significantly as we shifted our focus in investments toward higher-margin products.

Additionally, we've built a strong backlog of new design wins across all our product areas. We've been able to capture new customers in our existing footprint and expand into adjacent markets, setting us up for future revenue growth. Our profitability has never been better and with our strong balance sheet, we are well positioned to pursue growth aggressively, both organically and inorganically. Now let me update you on our business. In IoT, we continue to aggressively expand and diversify our customer base and end markets across all our product lines. With our strong backlog and design win momentum, we are increasingly confident that we can outpace the 10% to 15% industry growth rate. Despite the ongoing impact of supply constraints, we have outsized customer traction that enables us to deliver strong, sustainable revenue growth.

Let me share some highlights from our IoT portfolio this quarter. Our wireless connectivity solutions continue to scale quickly as many of the new design wins we have secured over the past nine months in home automation, streaming devices and smart watches are beginning to ramp to production. We are on track this quarter to double the quarterly revenue run rate for these products from when we closed the acquisition in July of last year, significantly exceeding our expectations. We are confident that the trajectory continues as we begin to market the innovative roadmap products developed for us by Broadcom. Our video interface products continue to outperform as demand for our docking stations remain strong. As companies begin to -- returning to the office, many will be shifting to a hybrid model where office hoteling becomes more important facilitating reduced corporate real estate needs.

Our universal docking solutions from DisplayLink solve many of the problems that can arise in hoteling and, as a result, we have seen strong demand. Our traditional 1:1 docks are also selling well, tied largely to the surge in PC unit sales. New for us is our entry into the protocol adapter and portable docking markets. Cayenne, a chip we announced nearly a year ago is seeing tremendous traction, opening up a whole new opportunity within the market. Several products featuring Cayenne are already shipping in retail. We plan to develop products for lower end, higher volume applications in order to extend our video interface franchise. Our edge SoC wins with our two Korean service providers are expected to start production this quarter. We expect an additional four set-top box designs to enter production before the end of this year.

Finally, in automotive, we expect additional cars with our TDDI solutions will be on the road from a number of OEMs in the U.S., Europe and China as the new model year begins production in the fall. Now let me turn to our PC products. This was another record quarter as we performed significantly better than our typical seasonality. We continue to benefit from the ongoing strength in the broader PC market, but are also winning new designs, particularly in Chromebooks. We started shipping to our first Chromebook customer last quarter and have followed that with new wins at two of the top three PC OEMs that are expected to be in production later this year. Our ability to take cost out of these products enables us to compete and grow share in our core touchpad and fingerprint markets at reasonable margins.

Meanwhile, we continue to look for opportunities to expand ASPs with more complex large touchpad designs and innovative keypad fingerprint solutions. Finally, let me give you an update on our mobile products. Our focus on delivering best-in-class touch solutions for the flexible OLED market continues to result in design wins. We are now ramping our second-generation controller to high volume production, thereby extending our performance lead. Those technical advantages have led to meaningful diversification for our mobile products, including our second win with a large Korean handset OEM for an upcoming midrange phone. In addition, we continue to win the significant majority of the new flagship-class designs for OLED touch with Chinese handset OEMs. Our two wins with the Korean OEM will begin shipping this quarter while the additional wins with the Chinese OEMs will ramp throughout this year and into the next calendar year.

Overall, I'm extremely happy with the start to 2021. Not only are we winning repeat business, but we are beginning to take share from our competitors and are finding new markets to sell into. Due to our solid gross margins, for the first time, we can take the offensive in the market and aggressively drive revenue. We will continue to practice the discipline that has carried the company for the last six quarters, but will have a renewed focus on design wins and top line growth. Now let me turn the call over to Dean to review our third quarter financials and provide our outlook.

Dean Butler -- Chief Financial Officer

Thanks, Michael, and good afternoon to everyone. First, I'll start with a review of our financial results for our recently completed quarter, then provide our outlook for our fiscal Q4. Revenue for the March quarter was $326 million, slightly above the midpoint of our guidance. Revenue was down 9% sequentially but performed better than typical seasonality, reflecting the increased diversification of our business and end markets. During the quarter, we had two customers above 10% of revenue at 13% and 11%. IoT continues to be our largest product group, accounting for 45% of revenue in the quarter while PC accounted for 30%, and mobile accounting for 25%. Our IoT revenue was down 6% sequentially and up 101% compared with the year ago quarter as we benefited from the two new acquisitions that we made last year, and as new design wins continue to ramp up across our IoT portfolio.

This was another record quarter for our PC products, with revenue up 8% sequentially to $98 million and up 25% year-over-year as work-from-home and now return-to-the-office demand continues to drive strong PC sales globally. Revenue from our mobile products was down 27% sequentially due to seasonality and down 54% year-over-year. For the March quarter, our GAAP gross margin was 47.7%, which includes $18.9 million of intangible asset amortization, $4.3 million in acquisition-related inventory step-up charges and $800,000 of share-based compensation costs. GAAP operating expenses in the March quarter were $123.9 million, which includes share-based compensation of $24.3 million; acquisition and integration-related costs of $8.7 million, consisting of intangibles amortization; amortization of prepaid development costs of $2.5 million; and restructuring-related costs of $1 million.

Our GAAP tax expense was $10.4 million for the quarter. In the March quarter, we had GAAP net income of $13.8 million or GAAP net income of $0.35 per share. Now turning to our non-GAAP results. Our March quarter non-GAAP gross margin of 55.1% was a record for the company and above the high-end of our guidance range, reflecting a stronger-than-expected product mix toward IoT during the quarter. March quarter non-GAAP operating expenses were in line with the midpoint of our guidance at $87.4 million, down $2.5 million from the preceding quarter. Our non-GAAP tax expense was $12 million for the quarter. We had a non-GAAP net income and EPS for the March quarter of $79.3 million and $2.03 per diluted share, respectively, as our focus on profitable growth continues to drive positive earnings for our shareholders.

Now turning to our balance sheet. We ended the quarter with $756 million of cash on hand, an increase of $439 million from the cash and short-term investment balance of the preceding quarter. Driven by the issuance of $400 million of debt and a company record of $136 million of cash generated from operations during the quarter, offset by the payoff during the quarter of $100 million that was previously outstanding under our revolver. Receivables at the end of March were $234 million and days of sales outstanding was 65 days. Our days of inventory was 42, slightly up from last quarter and ending inventories were $69 million. Inventory remains low relative to historic levels and below our desired level due to continued supply chain constraints. Capital expenditures for the quarter were $3.3 million, and depreciation was $5.3 million.

Now turning to our outlook for the fourth quarter. We anticipate the revenue for the June quarter to be in the range of $310 million to $340 million. Similar to last quarter, our backlog at the start of the quarter was more than 100% of our guidance range as everyone in the semiconductor industry continues to weather the supply chain constraints that limit our ability to service our customers' full demand. We expect our revenue mix from IoT, PC and mobile products in the June quarter to be approximately 49% [Technical Issues] expected to grow sequentially. While PC is expected to decline due to anticipated component shortages at these customers. I will now provide GAAP outlook for our June quarter and follow with non-GAAP outlook. We expect our GAAP gross margin to be in the range of 50% to 52%.

We expect our GAAP operating expenses in the June quarter to be in the range of $121 million to $125 million, which includes acquisition-related charges for intangibles and prepaid development cost amortization, stock-based compensation and restructuring costs. We expect our Q4 year-to-date GAAP tax rate to be approximately 18% to 20%. Finally, we expect our GAAP net income per share for the fourth quarter to be in the range of $0.45 to $0.75. Now for the non-GAAP outlook for our June quarter. We expect our non-GAAP gross margin in the June quarter to increase to be between 55.5% to 57.5% as we anticipate benefiting from an unusually favorable product mix that is not sustainable. As Michael indicated in his remarks, we are turning our focus toward driving growth going forward while targeting our gross margins to remain near the current level of 55% in the near term.

We remain committed to sustainably achieving the financial targets we provided last quarter on a longer-term basis. We expect our non-GAAP operating expenses in the June quarter to remain relatively flat to the third quarter and be in the range of $86 million to $89 million. We expect our non-GAAP net interest expense to be approximately $5 million in the June quarter. As a reminder, we issued $400 million of 4% fixed coupon debt in March, which will result in $4 million of quarterly cash-based interest expense in addition to the interest expense from our existing $525 million convertible notes. We expect our long-term non-GAAP tax rate for fiscal 2021 to continue to be in the range of 11% to 13%. Non-GAAP net income per diluted share for the June quarter is anticipated to be in the range of $1.85 to $2.15 per share on an estimated 40 million dilutive shares for Q4, reflecting the anticipated impact of a higher share price used to determine shares potentially issuable related to our outstanding convertible notes.

This wraps up our prepared remarks. I'd like to now turn the call over to the operator to start the Q&A session. Operator?

Questions and Answers:

Operator

[Operator Instructions] And our first question comes from the line of Christopher Rolland. Your line is now open.

Christopher Rolland -- Susquehanna Financial Group -- Analyst

Thanks for the question. I guess, first, gross margin. Is this the new run rate we should think about here? And perhaps remind us gross margins by segment and how they differ, so that we can kind of understand what this new trajectory could potentially be.

Dean Butler -- Chief Financial Officer

Yes. Good question, Chris. So like I alluded to in my remarks, what we think is the sustainable run rate business, now and sort of in the near term, is similar to our Q3 results around this 55% level. Gross margins in the quarter continue to do well. It's really related to mix, right? Mix continues to be favorable for us. As you know, we've been hard at work for the last couple of years on new products and new design wins and taking costs out of our supply chain where we can, and all that is really culminating into the growth and the gross margins that we've seen over the course of the last seven or eight quarters. And as far as -- how does gross margin break down between the different revenue product groups, we don't break that out and provide that guidance, but IoT tends to be higher and PC tends to be lower and mobile sort of in the middle of the two.

Christopher Rolland -- Susquehanna Financial Group -- Analyst

Thank you Dean. And then following up, I know you guys have previously talked about 8% to 10% kind of growth longer-term, is that something maybe that we could see next year? And then particularly as mobile was a little bit softer here in March, would it be your expectation for that to come back and kind of layer in on top of some of the progress you've made here in IoT and PC?

Michael Hurlston -- President and Chief Executive Officer

Yes. I think, Chris, we feel good about the 8% to 10% growth that Dean put out in the last call. I think our constraint, certainly in the next few quarters, is going to be supply. So we're going to be limited by what we can do on the supply chain. As I said in my comments, right now, we feel like we're doing really well in the market. In our core areas, we're executing, and then we're winning. I think the momentum has definitely turned in our favor and we're really beginning to win in the market. I'm really, really pleased. For the first time, we can really see what I'd characterize as outsized traction in the customer base. But I think we're going to be limited in terms of what we're able to do by what we're able to get in terms of supply. So I'd answer the question that way.

Christopher Rolland -- Susquehanna Financial Group -- Analyst

Thanks so much Mike.

Michael Hurlston -- President and Chief Executive Officer

Thanks Chris.

Operator

Next question is from Karl Ackerman. Your line is now open.

Karl Ackerman -- Cowen and Company -- Analyst

Yes thank you. Two questions, if I may. To that last point, I think it's well-known that display drivers and touch controllers and even PDI products are all in tight supply at the foundry level, given the Austin weather disruption and it fits to OLED. And so perhaps that's impacting your supply constraints as you just mentioned. But as a follow-up to that, could you discuss your ability to secure capacity that would allow you to better service the upside in demand you're seeing today in backlog?

Michael Hurlston -- President and Chief Executive Officer

Yes, Karl. First of all, good question, good to hear from you. I would say that we're in kind of a unique position, as you know, we have a pretty diffuse supply chain. That's one of the things that we've been trying to get on top of to consolidate the supply chain a bit and rationalize it down. But actually, here in the very immediate point, we have had some benefit from that. The fact that we do have a good number of supply chain partners, they've been relatively opportunistic in terms of price increases and things like that. But it has given us additional ability to go and get supply. So we probably have done better than average. I mean -- but for sure, the supply is -- the overall semiconductor problem is a long pole. But we've probably been able to do better than most in terms of working around some of the supply chain challenges. And we got a little bit lucky insofar as that very, very diffuse supply chain has given us some near term benefit.

Karl Ackerman -- Cowen and Company -- Analyst

Thanks for that Michael. Maybe for Dean, clearly, the mix shift toward IoT is helping you progress rapidly toward this new 57% gross margin target. At the same time, many of your peers have raised prices to offset rising substrate costs. And I was hoping you could discuss your ability to exert pricing power despite less of your demand generation coming from distribution? Thank you.

Dean Butler -- Chief Financial Officer

Yes. Good question, Karl. Yes, we hear in the news that there's lots of peers that are maybe changing prices. We certainly have a supply chain that's -- passed along some prices to us and we've recently recently passed along some of those, a subset, to a few of our customers where we reasonably can. We certainly aren't looking at this to extract revenue or extract margin from in our customers. I think everybody is sort of in the same boat on this one, and we're just trying to resolve the supply constraints that are out there. The other thing I would note, our gross margin expansion really has been happening over the course of the last 7, eight quarters. So this has been happening for us. It's been a methodical process and journey we've been on. So a lot of the expansion is sort of just from the hard work that we set up in the beginning.

Karl Ackerman -- Cowen and Company -- Analyst

Thank you.

Dean Butler -- Chief Financial Officer

Thanks Karl.

Operator

Next question is from Bill Peterson. Your line is now open.

Bill Peterson -- Analyst

Yes thanks for taking the question and a nice job on the execution, especially the continued gross margin expansion. I guess, in the prepared remarks, you talked about potentially going on the offensive, if you were, your gross margins are in a really healthy state. I was wondering if you can go in a bit more detail, maybe by your product segments, areas like maybe OLED, display drivers or the PC space, more in the consumer space where you haven't kind of been playing as much in the past until recently or in IoT, there's any particular segments where you feel that you can kind of attack the market better, maybe with some of the newer products like Katana. Any color you can give on where you're trying to grow your business from here?

Michael Hurlston -- President and Chief Executive Officer

Yes, Bill, good -- again, I appreciate the question. And thanks for the thought. You're absolutely right. I think that the top areas for us are DDIC, right? I think that we've talked about that. Mobile presents an opportunity for us to inflect in the second half of our fiscal year where we think we can pick up some really meaningful share. The second area, again, you touched on, which was PC. And there, it's Chromebooks. We've really haven't had much of a presence in Chrome up until maybe a quarter ago. We got qualified. Our PC team did a good job getting qualified on the Google reference design, and we started to make inroads there. And the third area, I would say, is our wireless connectivity in the IoT area. So wireless connectivity typically has a shorter design end cycle. We said in the prepared remarks that we've actually already doubled the run rate there from our starting point. We feel like that is an area that's just doing really, really well for us. But as Dean indicated, if you look at the midpoint of the guide, we're at 57% gross margin. I don't think that, that number is sustainable. I think it will come back to the 55% area that we're at for this quarter. And we'll use those couple of points as some pricing leverage to really start dialing up the revenue growth.

Bill Peterson -- Analyst

Yes thanks for that. Maybe just from the final segment you talked about in the wireless space. I guess, at this stage, it really feels that you're very reaching your run rate as of now. Trying to get a better understanding of how we should think about the growth of that segment from here? And what will be driving that growth between Wi-Fi, Bluetooth, any particular commentary on some of the end markets? You talked about some of the design wins. And I guess, finally, related to that, are there any areas you're focusing your investments on, I guess, organically or as you really feel you need to maybe try to augment your portfolio inorganically?

Michael Hurlston -- President and Chief Executive Officer

Yes. I think that our strength right now is in products that transfer video. So where we've done really well is in streaming devices, in security cameras, in drones. Anything that's moving video is where we've done very well. And those segments, obviously, are growing rapidly. We're coming from a very, very small base. And so we've been able to pick up outside traction. That's mostly Wi-Fi. It's Wi-Fi leading. But for the most part, our products are WiFi-Bluetooth combos. We've also done well, as we talked briefly about in the prepared remarks, in watches. We have that GPS asset, with it, it's just relatively unique. And so in the sort of wearable market, we've also done relatively well. I think as we think about it going forward, we've got these roadmap products that are coming from Broadcom, and I think those do open up additional segments for us. We think we can go into industrial. We can go into some more low power type applications and we're pretty excited about that. I think it opens up -- it strengthens our current field of use, but then opens up some additional fields of use. And we really, really feel good about this business and think it can be a grower for us -- outsized grower for us over the next couple of years, frankly.

Bill Peterson -- Analyst

Appreciate the color there. Thank you.

Operator

Next question from Kevin Cassidy. Your line is now open.

Kevin Cassidy -- Rosenblatt Securities -- Analyst

Thanks and congratulations on the great results. You mentioned that your backlog is more than 100% of your guidance. Can you talk about how the customers are reacting? How far out are they placing orders? And do you see a time when you can catch up to the backlog?

Dean Butler -- Chief Financial Officer

Yes. Good question, Kevin. I think probably every semiconductor team has probably been asked a similar question. And our answer is probably similar to most, which is, it's really challenge out there. Lead times are expanding from our suppliers. We, in turn, are encouraging customers to place -- extended lead times on us so that we can get the wafer starts and supply lined up for them. And so we do have actually probably more visibility than we would normally have at this point in the cycle. We don't have an exact time frame on when we might be able to service and fully catch up to all customers' needs. It does seem like the supply constraint is likely to last all of 2021, if not a little beyond. So it's just -- it's hard for all of the supply chain, I think, to respond. In turn, if you think about all the moving pieces to put a semiconductor product together with the lead times and the fabs and cycle time, it's just -- it's really challenging to respond all at once.

Kevin Cassidy -- Rosenblatt Securities -- Analyst

Okay. Understood. Congratulations on the continued momentum on your set-top box designs. And maybe also, if you could help out with the dynamics there. Are those service providers concerned about supply? And I know you're expecting to announce the design wins, but would they start giving you orders earlier than what would be a normal cycle for a set-top box?

Michael Hurlston -- President and Chief Executive Officer

Kevin, yes, you got it right. I would say that we are -- even though a lot of these are just entering production. We talked about the two Korean wins entering production now and a set of others, four others' production in the next couple of quarters. We have seen orders for all of those. So people are ordering ahead. We've -- they're as concerned as any customer about securing supply. This is on a more advanced process node. So as you likely know, the more advanced process nodes, there's actually less supply tension. And so that's obviously where we are with the set-top box products. They're on more advanced nodes. So the tension isn't as great there, but we still are getting plenty of lead time to back up our confidence in some of these production starts.

Kevin Cassidy -- Rosenblatt Securities -- Analyst

Okay. Thank you.

Operator

Next question from Raji Gill.

Raji Gill -- Needham & Company -- Analyst

Yes and thanks for taking my question and congrats as well on all the good momentum. Dean and Michael, just wanted to get a -- kind of dig a little bit further into the gross margin. Almost a strategic shift that seems to be happening. So when you're -- do you feel that 55% gross margin is kind of the appropriate level? Is that a margin that you think you'd want to achieve in the relative medium term? And how do you balance that versus kind of your long-term target, which is a 57%? Is this kind of a short term kind of medium term tactic in order to drop the price to get more revenue growth and then kind of return back to 57% gross margin? Is kind of -- I'm kind of struggling how to think about kind of the drop in margin and then kind of going back up again to 57%, how does that practically work?

Dean Butler -- Chief Financial Officer

Yes, that's right, Raji. I think you have it. It's short term, medium term, where effectively, we're going to choose to get a little bit more aggressive on our pricing to go after some revenue. Honestly, what we're trying to do is accelerate our top line revenue potential for big slugs of revenue that we can drop to high operating income, right? So operating at the operating margin line, I think, is a great trade-off for a couple of points here in the near term. But 57% in the longer-term is still our goal, and we're still driving toward that as we try to step on the gas here in the near term.

Michael Hurlston -- President and Chief Executive Officer

Yes. I think, Raji, many people accuse Dean of sandbagging at our Analyst Day -- what, a year or so ago, where we hit our long-term targets like within three or four quarters. This time, we've hit two or three of our long-term targets within one quarter, OK? So we're trying to take the foot off the gas a little bit on operating margin and, particularly on gross margin, to drive top line growth. And as Dean said, my view is we need to get that engine going. We see opportunity right in front of us where we -- as he said, there are big slugs of revenue that we think we can capture. And we're going to do that at the slight expense of gross margin here to get the revenue prompt really going.

Raji Gill -- Needham & Company -- Analyst

And for my follow-up, if you look at the mobile business kind of following the divestiture, it's been declining kind of on a sequential basis. And now it's kind of indicating to be around the $78 million range. So kind of falling from $133 million at the peak and then kind of falling down to $78 million, again, post the divestiture. How do we think about the mobile business? Is this an area that, to your point about kind of being more aggressive on price getting into the DDIC market, is this an area that you want to try to reaccelerate the revenue growth in the mobile segment specifically?

Michael Hurlston -- President and Chief Executive Officer

Again, yes, I think you got it right. I think what we'd say right now -- and we've had this conversation. I'd say we're sort of now at the bottom of our mobile revenue curve. We've seen significant erosion on one of our large North American handset customers and a touch opportunity there. I think that we feel like that those numbers are out of our go-forward guidance. And so that -- we feel like that business, the number we just described is kind of the bottom. And from here, we will build. There are opportunities for us, as you correctly characterized, in DDIC. We continue to feel good about our our OLED touch. That continues to do well in the market. As we continue to accumulate these wins, those numbers are going to grow. And then we have that traditional LCD driver that we think is now at steady state. So we feel good about our position, Raji. And near term, as you correctly said, that's the single biggest opportunity for us to start getting the top line going again.

Raji Gill -- Needham & Company -- Analyst

Appreciate. Thank you.

Operator

[Operator Instructions] And we have a question from Harrison Barrett. Your line is now open.

Harrison Barrett -- Arete Research -- Analyst

Hi guys, thanks for taking my question. Do you have any updates on the opportunity for the Katana product, the low power SoC into the industrial market. Is this a market you think you can break into on your own? Or might this be an area for an acquisition?

Michael Hurlston -- President and Chief Executive Officer

Yes, Harrison, we've -- a couple of pieces to that. I think we're in the early innings with Katana. We've actually just put one of our best leaders on this to sort of drive it to engage with the customer base and then figure out a road map. And I think we've talked about in a previous call, we are partnering up with a third-party, a company called Eta Compute, that's helping us with some of the software that would go into that. So it just started. It's early innings. I'd say the customer traction has been relatively surprising. We're probably the most sizable player now in a low power AI application, particularly one that leads with vision rather than voice. But we're quite a ways away, I think, from seeing revenue, probably a year out from turning the design traction into something material. But I like our chances and I think it's going to lead to a full product roadmap. And as I say, part of our story to mitigate our expense has been to partner a bit, both in the software, which we've announced, and then we've done some other hardware partnerships. Would we acquire in this space? We think it's an exciting space. It's early innings. I think what we're trying to do is test it out and find out where the opportunities are. And as we figure out this market, we'll better chart our forward-looking course.

Harrison Barrett -- Arete Research -- Analyst

Great, thanks. And then I think this was touched on in a few of the questions. But do you have any additional color on the opportunity in OLED display drivers? I mean, is there any color around the types of customer? Is this just opportunistic given the tight supply environment? Or are there sort of some longer-term roadmaps that you're engaged in here?

Michael Hurlston -- President and Chief Executive Officer

Yes. It's probably more the latter than the former. I think that we've -- as the market has shifted from Korean glass to Chinese glass, an opportunity window has opened up for us. And so we've been carefully selecting LCD manufacturers, OLED panel manufacturers that we partner with. And we think that we bring some performance advantages to bare. As we've characterized, we see this sort of a step in our journey. I think we want to enter with the stand-alone DDIC and partner up with the Chinese glass guys. But as we think about this on a longer road, we would want to really go after the TDDI opportunity that we talked about several quarters back. So I think that our first engagement point is relatively opportunistic, but gets us in there and gets some meaningful revenue going. We lead with performance. We do follow that with supply and some other things that we think that are obviously very important. And then we -- as we look further out, it would be more of a TDDI type of play.

Harrison Barrett -- Arete Research -- Analyst

Great. Thanks.

Michael Hurlston -- President and Chief Executive Officer

Thanks Harrison.

Operator

And there are no further questions. I would now like to turn it back to Michael Hurlston -- Sorry. We do have one question here from Martin Young.

Martin Young -- Analyst

Sure. Go ahead.

Operator

Your line is now open.

Martin Young -- Analyst

So can you maybe talk about -- I'm digging into the IoT market dynamics a little bit more. Are you still seeing supply chain -- supplying shortages regarding the wireless segment? And when do you see that resolving itself?

Michael Hurlston -- President and Chief Executive Officer

Most definitely. I mean, we're certainly seeing some supply chain shortages and wireless. I think we -- Martin, we've talked about that one being particularly challenging because it was a new business for us so we sort of had unforecasted growth. Now we've successfully been able to move our supply chains. So we've moved among a couple of different foundries. And I think we found a spot now where we can successfully keep up with demand. We've been able to qualify some of our old devices on new foundries, and that's opened up our supply chain a bit. So that gives us the confidence that we can continue to keep that growth engine going. But it certainly has been a challenge. We've had to work hard to sort of reduplicate our supply chain. First bringing the supply chain from Broadcom to Synaptics, and then maneuvering around some of the foundry challenges by reduplicating the dye at different places.

Martin Young -- Analyst

Thanks. Next, I want to ask about the PC business. And do you think that the strengths returning to something else in the sense that where -- there may be a broader set of opportunities outside laptops for you on a going-forward basis or maybe there's a step-up on the need for the docking stations, for instance?

Michael Hurlston -- President and Chief Executive Officer

Yes. We talked about that in the remarks. Certainly, docking station, there absolutely has been a step-up in demand. That's been driven by, first, work-from-home. People brought docks home. Now as people return back to the office, we think hoteling is going to be a common configuration. So the dock has been good. In the PC area, we think that we have additional opportunity as well in terms of products that we currently don't really engage in, for example, touch on the screen itself rather than touchpad. So we think we can expand the set of products that we offer to the PC customers. And then we're going after entirely new applications. We talk about wireless monitors, wireless docking stations. We think that those will become increasingly prevalent as time moves forward. So there's a lot of things going on in the PC space. We're obviously doing well in our core business, but we see opportunities to open up new markets and actually new segments of the PC, so we can sell more content into the existing boxes.

Dean Butler -- Chief Financial Officer

Yes. The other thing I would say is there's a trend within sort of the PC laptop world to continue to expand the size of the touchpads, and that's an opportunity for us going forward. There's also a number of accessories, PC accessories, that's also -- they're doing quite well in the marketplace. So all opportunities for us.

Martin Young -- Analyst

Got it. Thank you very much.

Michael Hurlston -- President and Chief Executive Officer

Thank you Martin. I'd like to thank everyone for joining us today. We certainly look forward to speaking to you at our upcoming virtual investor conferences. I hope everybody stays well and see you all soon. Bye.

Operator

[Operator Closing Remarks]

Duration: 48 minutes

Call participants:

Jason Tsai -- Head of Investor Relations

Michael Hurlston -- President and Chief Executive Officer

Dean Butler -- Chief Financial Officer

Christopher Rolland -- Susquehanna Financial Group -- Analyst

Karl Ackerman -- Cowen and Company -- Analyst

Bill Peterson -- Analyst

Kevin Cassidy -- Rosenblatt Securities -- Analyst

Raji Gill -- Needham & Company -- Analyst

Harrison Barrett -- Arete Research -- Analyst

Martin Young -- Analyst

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