Small chipmaker Cirrus Logic (NASDAQ:CRUS) has been talking about its plans to diversify its business beyond sales of audio chips into premium smartphones.
For example, in its most recent investor presentation, the company indicated that its serviceable available market (SAM) is set to expand dramatically in 2021 from 2017 levels thanks to growing opportunities in smart accessories, haptic drivers, and smart-home applications, as well as a new $750 million opportunity in biometric voice chips.
All of that is well and good, but -- at least today -- the company is still heavily dependent on sales of audio chips to Apple (NASDAQ:AAPL) (mainly in support of the iPhone).
Let's take a closer look at that Apple dependence.
It's still huge
In its most recent quarterly filing (the company reported results on Nov. 1), Cirrus Logic said that sales to Apple made up "approximately 82 percent of the Company's total net sales for each of the second quarters of fiscal years 2019 and 2018, respectively."
In other words, Cirrus' dependence on Apple was unchanged year over year as a percentage of sales.
Over the first six months of fiscal 2019, sales to Apple made up 79% of the Cirrus Logic's revenue -- down slightly from 80% in the year prior.
Management talked up business beyond Apple
During Cirrus' most recent earnings call, management talked up some of the traction that it's seeing in customers beyond both audio products and Apple.
For instance, Cirrus Logic CEO Jason Rhode said that "after our initial win in a single smartphone model last quarter, we expanded our footprint with one of the largest Android OEMs and are now shipping boosted amplifiers in multiple models."
He added that Cirrus Logic expects "additional flagship devices utilizing our technology to launch over the next six months."
As mentioned above, one area where Cirrus looks poised for growth is in haptic drivers. The company pegged the market opportunity at $170 million in 2017 and expects it to balloon to $450 million by 2021.
Cirrus Logic's total revenue in its fiscal 2018 was $1.53 billion and analysts expect that figure to be $1.3 billion in fiscal 2019.
"As I mentioned we're now shipping a haptic driver in our first flagship Android smartphone," Rhode said. "While design activity with our first-generation haptic driver is robust and we expect new devices to come to market over the next 12 months using this component, we plan on taping out our first product design specifically for haptics in the spring of calendar 2019."
A return to growth in fiscal 2020
Cirrus Logic is expected to see its sales fall in the current fiscal year (fiscal 2019) -- analysts are calling for Cirrus' sales to decline by 14.8% -- but Rhode appears optimistic that this isn't going to become a habit.
"With a robust portfolio of products and innovative road map, we believe in our ability to expand our share in our target markets and return to year-over-year revenue growth in [fiscal] 2020," Rhode asserted.
Analysts seem to believe the company, but they're only expecting Cirrus to deliver 4% sales growth and a little more than 3.8% earnings-per-share growth.