Thank you for standing by and welcome to the Synaptics' Third Quarter Fiscal Year 2021 Conference Call. At this time, all participants are in listen-only mode. On today's call, there will be a question-and-answer session. [Operator Instructions] Thank you. I would like to hand the conference over to Jason Tsai. You may begin..

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 8-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 non-cash 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 suggested 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..

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 remained 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 a year-and-a-half 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 and 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're 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 remained 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 one-to-one docs 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, 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 we're 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 costs 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 mid range 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 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 we'll 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..

Thanks Michael and good afternoon to everyone. First, I'll start with a review of our financial results for our recently completed quarter than 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 a 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 pay-off 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%, 27%, and 24% respectively. We expect our business will perform better than historic seasonality as IoT is 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 costs 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 towards 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?.

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

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 king of understand what this new trajectory could potentially be? Thanks..

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 will 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 of 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 breakdown between the different revenue product groups, we don't break that out and spread that guidance, but IoT tends to be higher, and PC tends to be lower and mobile sort of in the middle of the two..

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?.

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 that 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 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..

Thanks so much, Michael..

Thanks Chris..

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

Yes, thank you. Two questions if I may. To that, to your last point, I think it's well known that display drivers and touch controllers and even TDDI products are all in tight supply at the foundry level, given that Austin weather disruption and essentially 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 of demand you're seeing today in backlog?.

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 points, 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 the 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 in so far as that very, very diffuse supply chain has given us some near-term benefit..

Thanks for that Michael, maybe for Dean. Clearly the mix shift toward IoT is helping you progress rapidly towards 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..

Yes, good question, Karl. We hear in the news that there is 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 passed along some of those - subset to a few of our customers where we' reasonably can.

We certainly aren't looking at this to extract revenue like extract margin from our customers. I think everybody 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 seven, eight quarters. So this has been happening for us, has been a methodical process in 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..

Thank you..

Thanks, Karl..

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

Yes, thanks for taking the question and 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 - as your gross margins are in a really healthy state.

I was wondering if you could go into a bit more detail maybe by your product segments, areas like maybe OLED, display drivers or PC space more, more in the consumer space where you haven't kind of been playing as much in the past until recently or in IoT? Is there any particular segments where you feel that you can kind of attack the market better where you have some of the newer products like Katana, any color you can give on where - you are trying to grow your business from here?.

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 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-in 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..

Yes, thanks for that. Maybe just from the final segment you talked about in - the wireless space. I guess that - it really shows that you're already reaching the 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 WiFi, Bluetooth, and 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 areas you're really feeling you maybe try to augment your portfolio inorganically?.

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 and security cameras and 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 WiFi, it's Wi-Fi leading, but for the most part, or 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 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's - it opens up, it strengthens our current field of use, but that 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..

I appreciate the color there. Thank you..

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

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? Do you see a time when you can catch up to the backlog?.

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, you know, 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 timeframe 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 in the fabs and cycle time, it's just - it's really challenging to respond all at once..

Okay, understood. And yes, congratulations on the continued momentum on your set-top box designs and maybe also if you could help out with the dynamic there.

Are those service providers concerned about supply and I know you're expecting to announce design wins, but would they start giving you orders earlier than what would be a normal cycle for a set-top box?.

Kevin, yes, you've got it, you've got it right. You know, 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 - for 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 is 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 is great there.

But we still are getting plenty of lead time to back up our confidence in some of these production starts..

Okay, thank you..

Next question from Raji Gill..

Yes, thanks for taking my questions and congrats as well on 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 - you feel that 55% gross margin is kind of the appropriate level, is that a margin that you think you 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 do you - 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?.

Yes, that's right, Raj. I think you have it. Its 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 I - 57% in the longer term is still our goal and we're still driving towards that as we try to step on the gas here in the near term..

I think Raji, many people accused Dean of sandbagging at our Analyst Day probably when a year or so ago where we hit the 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, okay.

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 prop really going..

And for my follow-up, if you look at the Mobile business kind of following the divestiture, it's been declining on a sequential basis, and now it's kind of indicating to be around the $78 million range, so kind of falling from you know $133 million at the peak and then kind of falling down to $78 million again post 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?.

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 touch opportunity there.

You know, 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 built. There are opportunities for us as you correctly characterized in DDIC.

We continue to feel good about our OLED touch, that continues to do well in the market as we continue to continue to accumulate these wins, those numbers are going to grow and then we have that traditional LCD driver that we think is it now at steady state.

So we feel good about our position Raji in near-term as you correctly said, that's the single biggest opportunity for us to start getting the top line going again..

Appreciate it. Thank you..

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

Hi guys, thanks for taking my question.

Do you have any updates on the opportunity for the Katana product, this 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?.

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 roadmap, and I think we've talked about in the 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 we 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..

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?.

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 is 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 bear.

As we've characterized, we see this sort of a step in our journey. I think we want to enter with the standalone 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, get 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 as we look further out, it would be more of a TDDI type of play..

Great, thanks..

Thanks Harrison..

And there are no further questions. I would now like to turn it back to Michael Hurlston. I'm sorry, we do have one question here from Martin Yang. Your line is now open..

Thanks for taking my question. So can you maybe talk about - digging into the IoT market dynamics in a bit more? Are you still seeing those supply chain - supply shortages regarding the wireless segment.

And when do you see that our resolving itself?.

Most definitely. I mean, we're certainly seeing some supply chain shortages in 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 un-forecasted growth. Now we've successfully been able to move our supply chain.

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 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 re-duplicate our supply chain, first bringing the supply chain from Broadcom to Synaptics and then maneuvering around some of the foundry challenges by re-duplicating the die at different places..

Thanks.

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

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 is 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..

Yes, the other thing -.

It's very clear -.

I have to say is, there is 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 here going forward. There's also a number of accessories - PC accessories that's also we're doing quite well in the marketplace. So all opportunities for us..

Got it. Thank you very much..

Thanks, 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..

This concludes today's conference. Thank you everyone for participating. You may now disconnect..