The Google (NASDAQ:GOOGL)-branded, LG-manufactured Nexus 5 is the first high-definition smartphone to use Synaptics' (NASDAQ:SYNA) ClearPad 3350 In-cell touchscreen technology. This new technology equips the Nexus 5 with a single-chip touch controller integrated into the display. The product offers increased touchscreen sensitivity with a 10-finger multi-touch display and 120 Hz refresh rate.
The much-anticipated Nexus 5 has been deemed Google's latest flagship product. The smartphone was launched with the Kit Kat Android operating system, named after the popular Kit Kat candy bar in a unique co-branding partnership with Nestle. The Nexus 5 is the first smartphone to use the new Kit Kat Android OS version 4.4.
The Nexus 5 has benefited from Google's recent acquisition of Motorola by using voice-activated search functionality similar to the technology found in Motorola's MotoX. The Nexus 5 also offers LTE connectivity technology, which allows the device to meet the demand for high-bandwidth and low-latency wireless data service.
Synaptics shows outstanding growth
The ClearPad 3350 technology used in the Nexus 5 features Synaptics' patent-pending In-Cell technology. This new technology allows touchscreen functionality to be present inside of the LCD display, which negates the need for an additional layer of sensors. The benefit is that it allows the mobile device to be thinner, lighter, and more responsive.
Synaptics' future growth depends on acquiring new partnerships within mobile industry. Synaptics' Keving Barber, senior vice president and general manager of the Smart Display Division, said:
This latest design win with Google further underscores Synaptics's growing leadership in the mobile market and our commitment to forging strong partnerships across the mobile ecosystem to deliver groundbreaking, marketleading touchscreen technologies.
As an investor, Synaptics shows outstanding growth. In the first quarter of 2014, the company reported revenue of $222.6 million, which is an amazing 75% increase over $127 million for the same quarter last year. Synaptics reported that 73% of revenue reported was due to mobile product sales, which was up 152% year-over-year.
Synaptics expects to continue exceptional revenue growth in the second quarter of 2014. Kathy Bayless, CFO, said:
Considering our backlog of approximately $117.0 million entering the typically front-end loaded December quarter, customer forecasts, and the resulting expected product mix, we anticipate revenue (exclusive of the impending closure of the acquisition of Validity) to be in the range of $192.0 million to $208.0 million for the second quarter, an increase of 34% to 45% on a year-over-year basis.
Investors should monitor how consumers react to the Nexus 5 as the first In-Cell ClearPad 3350 HD smartphone. A warm reception by Android enthusiasts will likely spark interest in Synaptics' ClearPad 3350 technology by other mobile device manufacturers. Look for Synaptics to increase revenue through new client sales in the form of touchscreen technology.
The Synaptics ClearPad 7300 powers the 7-inch Kindle
Back in October, Amazon (NASDAQ:AMZN) selected the ClearPad 7300 to power the touchscreen of the third-generation of 7-inch Kindle Fire HD and the 7-inch Kindle Fire HDX. The ClearPad 7300 gives the Kindle 10-finger touch support and consumes less power than traditional touchscreens. Synaptics's Brian Roberts, senior director of large touchscreen solutions, said:
The Amazon Kindle brand has become ubiquitous among on-the-go consumers, and we believe this next generation of tablets will offer the high-quality touch experiences that Kindle Fire users expect.
With the ClearPad 7300 technology, Amazon is capable of producing thinner and lighter tablets. This will help Amazon stay competitive in a growing tablet market that emphasizes portability, which is important to today's tablet buyers.
As an investor, monitor how consumers react to the new generation of 7-inch Kindle Fire HD and the Kindle Fire HDX tablets. A positive response from Kindle users could translate into more tablet business for Synaptics.
The bottom line
Synaptics delivered a responsive HD touchscreen for the Google Nexus 5 smartphone. The Nexus 5 will likely be Synaptics' calling card for future business in the mobile industry. To stay relevant, mobile device manufacturers will need to incorporate In-Cell technology to produce lighter, thinner, more responsive HD devices. Synaptics will be ready to fill that need with the In-Cell ClearPad 3350 touchscreen technology.
As an investor, Synaptics currently offers amazing growth potential. Synaptics is likely to expand revenue through new business clients interested in touchscreen technologies. Keep an eye out for new manufacturers using the In-Cell ClearPad 3350 touchscreen technology on future mobile devices.
Ryan Sullivan has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.