For Apple's (NASDAQ:AAPL) signature iPhone, the product release schedule is a rather predictable two-year cycle designated by number and letter changes. On the number change years, there have been major form factor upgrades -- both the iPhone 5 and iPhone 6 incorporated larger screens into the unit, which increased to 4-inches and 4.7-inches, respectively -- amid a total unit overhaul.
On the off-years, the letter addition years, Apple generally incorporates a processor-chip upgrade and a signature user feature. For example, the top-of-the-line iPhone 5s introduced the world to the Apple A7 with the M7 motion-coprocessor on the hardware side, and brought Apple's Touch ID fingerprint-identification technology for a user-focused feature.
For the current-gen iPhone 6s and iPhone 6s Plus models, Apple -- true to form -- upgraded to the newest A9 chip with an M9 coprocessor for the hardware, but the biggest-selling point was its 3D Touch feature. Apparently, Samsung (NASDAQOTH:SSNLF) thinks the feature is worthwhile, as a new report from Weibo (h/t Cult Of Android) claims its next-gen Galaxy S7 will incorporate similar features with its ClearForce technology.
A good sign for Synaptics investors
Although Samsung has a formidable semiconductor business in its own right -- and even makes the A9 chip for Apple's iPhone -- Samsung is using Synaptics' (NASDAQ:SYNA) technology to copy Apple's feature. For the touchscreen maker, which is currently valued at less than $3 billion, this continues a strong month of returns.
Fellow Motley Fool writer Evan Niu covered Synaptics' impressive 18% increase in September, which was due entirely to the disclosure that the company rejected a takeover attempt from a Chinese state-backed investment group that offered a 70% premium -- valuing the company at nearly $4 billion -- above the prior-day's closing price.
Interestingly enough, the news that Samsung was also looking to use Synaptics for this new feature came from China as well, as China's supply chain leaks are well-chronicled and a source of insight about future products. Earlier this month, the company formally announced its ClearForce technology, and its expected ship timeframe -- early 2016 -- lines up well with Samsung's expected Galaxy shipment times, as the South Korean conglomerate has generally shipped the device in April.
Before you hit that buy button...
On the surface, it may seem like Synaptics is a strong-buy candidate, and it may very well be. After all, the company appears to be an integral contributor to the next big user-oriented feature and had an investment group attempt to buy it out for 70% higher than its current price. However, long-term investing in suppliers can be a tough proposition, as technology can quickly change, competition is fierce and encouraged by buyers, and the contract terms can be one-sided.
Recently, the highest-profile story of a supplier cursed with a large contract is that of GT Advanced Technologies. After winning a seemingly gamechanging contract from Apple, the company later had to file for Chapter 11 bankruptcy, as the actual deal was structured heavily in Apple's favor. Therefore, I'd like to hear some commentary on forward guidance from the company in regards to this new technology, but I'm putting it on my watchlist in the interim.