2014 analyst and investor day presentation v2

Welcome Synaptics Analyst Day 2014

Copyright © 2014 Synaptics Incorporated. All Rights Reserved.

Video Placeholder

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This presentation contains forward-looking statements that are subject to the safe harbors created under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Act of 1934, as amended (the “Exchange Act”). Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business, and can be identified by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements may include words such as ”expect,” “anticipate,” “intend,” “believe,” “estimate,” “plan,” “target,” “strategy,” “continue,” “may,” “will,” “should,” variations of such words, or other words and terms of similar meaning. All forward-looking statements reflect our best judgment and are based on several factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Such factors include, but are not limited to, the risks as identified in the “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections of our Annual Report on Form 10-K for the fiscal year ended June 28, 2014, Quarterly Report on Form 10-Q for the fiscal quarter ended September 27, 2014, and other risks as identified from time to time in our Securities and Exchange Commission reports. Forward-looking statements are based on information available to us on the date hereof, and we do not have, and expressly disclaim, any obligation to publicly release any updates or any changes in our expectations, or any change in events, conditions, or circumstances on which any forward-looking statement is based. Our actual results and the timing of certain events could differ materially from the forward-looking statements. These forward-looking statements do not reflect the potential impact of any mergers, acquisitions, or other business combinations that had not been completed as of the date of this filing.

Disclosure

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Agenda

Time Agenda Speaker

8:30AM – 9:00AM Arrival, Coffee, Check-in, Introductions

9:00AM – 9:20AM Welcome, Strategic Overview Rick Bergman

9:20AM – 9:35AM HISD Update: Business Trends, SecurePad Huibert Verhoeven

9:35AM – 10:00AM SDD: Business Trends, RSP Update, Display Integration Kevin Barber

10:00AM – 10:15AM Break

10:15AM – 10:35AM China Update: LCM Plan, Customer Perspective Scott Deutsch

10:35AM – 10:40AM BPD: Business Trends, Speaker Set-up Ritu Favre

10:40AM – 11:05AM *Guest Speaker – FIDO Michael Barrett

11:05AM – 11:25AM BPD Market Insights, Product Roadmaps Ritu Favre

11:25AM – 11:35AM Financial Recap Kathy Bayless

11:35AM – 11:55PM Q&A All

11:55AM – 12:00PM Wrap-Up Rick Bergman

12:00PM – 1:00PM Lunch and Demos All

*Session Not Webcast

4

Advancing the Human Interface Rick Bergman | President and CEO


#1 Human Interface Company

Synaptics Leads the Human Interface Revolution Pioneering the Relationship Between People and Intelligent Devices

6


Transformation of Synaptics

People • Leadership • Scale • Location

Business • Revenue • Target Markets • Growth Opportunity

Core Technology • Technology Suite • R&D Investments • Products Platform Solutions

2012 Growth

2013 Sustainable Growth

2014 Profitable Growth

7


Synaptics Executive Team (SET)

Rick Bergman, President & CEO

Bret Sewell SVP, Marketing and Business Development

David Wang SVP, Silicon System Engineering

Alex Wong SVP, Operations

John McFarland SVP, General Counsel & Secretary

Patrick Worfolk VP and CTO

Kevin Barber SVP, GM of Smart Display Division (SDD)

Kathleen Bayless SVP, CFO and Treasurer

Scott Deutsch SVP, Worldwide Sales

Karen Gaydon SVP, Worldwide HR

Huibert Verhoeven SVP, GM of Human Interface Systems Division (HISD)

Ikuo Kudo SVP, GM of Custom Design Division (CDD)

Ritu Favre SVP, GM of Biometric Products Division (BPD)

8


Talent Pool

676 697 852

1230

1641

600

800

1000

1200

1400

1600

1800

2000

2011 2012 2013 2014 2015

Em

ploy

ees

FY14 Q1 End, + 350 RSP

9


2011 Asia 38%

2015 Asia 61%

North America to Asia Centric

North America

671 ~ Employees

Asia

970 ~ Employees

10


Revenue Growth

361 473 515 598 548

664

948

$0$200$400$600$800

$1,000$1,200$1,400$1,600$1,800

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Mobile PC

Growth Accelerates: FY13 + 21%, FY14 + 43% & FY15 + 70%

2012-2014 CAGR:

+32%

FY15–Street Estimate

11


Revenue Mix

PC Mobile

Q1FY13 $127 Million

PC

Mobile

Q2FY15 $433 Million

Mid-point Guidance

12


Growth of Target Markets

13

CY14 $ 2.7 Billion

~39% CAGR Market Opportunity More than Triples

CY18 $10.1 Billion

(Apple: SmartPhones Only)

Data Source: Internal Estimates

http://3.bp.blogspot.com/-9m4IdZPVrws/T5rp0taKqJI/AAAAAAAABFg/O4MVX5Azk7Q/s1600/lamborghini.png


Hyper Growth Markets – TDDI

14

0

100

200

300

400

500

2014 2015 2016 2017 2018

Uni

ts (M

u)

2015-2018 CAGR:

+88%

Note: Years are Calendar Based

Source: DisplaySearch; Internal Estimates


Hyper Growth Markets – Biometrics

● Accelerating adoption in low and mid end devices ● Strong attach rates driven by low cost solutions, benefits of online authentication

and mobile payment

2013 2014 2015 2016 2017 2018

Uni

ts (M

u)

Mobile Tablet Notebook PC

200

400

600

800

1000

Source: IDC, Gartner Excludes Apple

2015-2018 CAGR:

+40%

15


Core Technology Leadership

2015

LTS

LTDI

TDDI

DDI

Fingerprint

ForcePad

SecurePad eDP

Video- compression

2011

16

TouchPad/ ClickPad

ClearPad Smartphones


Investing for Growth

102 129 174

$0

$80

$160

$240

$320

FY12 FY13 FY14 FY15

R&D Fuels Growth: Drives Winning Product and Technology Portfolio

2012-2014 CAGR:

+30%

US

D $

(Milli

ons)

17


Products Platform Solutions (Fingerprint)

• Coating processing technology

• Material science

• Molding processes • Material science

• High resolution capacitive sensor design

• Mixed signal silicon design • Image processing

algorithm development • Firmware design

• Module electro-mechanical design

• Security architecture and software

• Matcher algorithms • FIDO integration • Mechanical system

integration • Electrical system integration • Human factors/

usability testing

High Technical Content in Fingerprint Modules 18


Enabling Optimized Ecosystem Solutions

Fingerprint Sensing on Glass

Noise Mitigation

Low Latency

Power Benefits

3D Gestures

Sensor Fusion

Secure Password

Entry

19

Products Platform Solutions (TDDI)


Target Markets

CY14 1.6 Billion Units

50% Unit Growth (10%+ CAGR) Increased Solution Value per Device in All Core Markets

CY18 2.4 Billion Units

(Apple: Smartphones Only)

Data Source: IDC and Internal Estimates

• TouchPad™

• ClearPad • ForcePad®

• Natural ID

• ClearPad • Display Drivers • Natural ID

• ClearPad®

• Display Drivers • Natural ID™

20



Synaptics is #1

Market Leadership

SYNA 62%

Notebook PC CY13 Q2

SYNA 67%

Notebook PC CY14 Q3

TouchPad Market Share (Excludes Apple) Source: IDC and SYNA Estimate (Excludes Apple)

21


SYNA 38%

Smartphones Touch

SYNA 42%

Smartphone Touch

Smartphone Market Share (Excludes Apple)

CY13 Q2 CY14 Q3

Source: IDC; SYNA Estimate (Excludes Apple)

Market Leadership

22

Synaptics is #1


SYNA 16%

LTS (Notebooks & Tablets)

SYNA 11%

LTS (Notebooks & Tablets)

LTS Market Share (Excludes Apple)

CY13 Q2 CY14 Q3

Market Leadership

Source: IDC; SYNA Estimate (Excludes Apple)

23


SYNA 33%

Small / Medium DDIC

DDIC Market Share (Includes Apple)

CY14 Q3

Market Leadership

24


Fingerprint Market Share

Market Leadership

SYNA SYNA

Mobile Market CY14 Q3

25

Synaptics is #1

PC Market CY14 Q3


Summary

Seize the Opportunity

Transformed Company Over

Past Three Years

Market and Technology

Leader In Two Hyper Growth

Markets

People and Technology

Profitable Growth

26

Advancing the Human Interface Huibert Verhoeven | SVP, GM of Human Interface Systems Division (HISD)


Notebook PC Market

0

50

100

150

200

250

2014 2015 2016 2017 2018

Uni

ts (M

u)

2-in-1: 29% CAGR

Clamshell: 0% CAGR

Total Clamshell + 2-in-1: 3% CAGR

176 180 185 191 196

Source: IDC (Aug-2014)

28


HISD Business Strategy

● Strong core business

● 65%+ market share

● Enhanced product line

● Gaming peripherals

● Automotive

29


Enhanced Product Line

ForcePad ● 2-in-1 keyboard covers

● Fanless designs

● Ultrathin – 1 mm

● Bigger battery

30


Enhanced Product Line

SecurePad ● Security

● Convenience

● No Stored Passwords

● Public Key Encryption Authentication

● FIDO Compliant

31


Gaming Peripheral Market

-

20

40

60

80

100

120

140

2013 2014 2015 2016 2017 2018

Gaming Peripheral Volume (M)

Mice Keyboard GamePad

Market Ready for Innovation and ASP Growth Touch, Force and Keyboard Technologies

Source: IDC

32


Emerging Automotive Opportunities for Touch

● 100M cars by 2018

● Multiple touch points per vehicle

● TouchPad

● HMI – touchscreens

● Mechanical button replacement

● Door mechanisms 0

20

40

60

80

100

120

2012 2013 2014 2015 2016 2017 2018

Uni

ts (M

u)

Top 10OEMVehicleproduction

InfotainmentUnits

Source: Displaysearch

33


HISD – Summary

34

Strong Core Business

Gaming Peripherals Automotive

• Innovate to win • Number 1

market share

• Adjacent market

• Common technologies

• Improve margin

• Strong demand for touch innovation

• Increased reach in 2017

Advancing the Human Interface Kevin Barber | SVP, GM of Smart Display Division (SDD)


Agenda

● Market Trends

● Renesas SP Drivers Acquisition

● Innovation: Discrete & Integrated

36


Growth of Target Markets

37

CY14 $ 2.7 Billion

~39% CAGR Market Opportunity More than Triples

CY18 $10.1 Billion

(Apple: SmartPhones Only)

Data Source: Internal Estimates



Global Smartphone Volume Forecast

0

400

800

1,200

1,600

2,000

20141,244

20151,405

20161,557

20171,701

20181,804

Uni

ts (M

)

Source: IDC; Internal Estimates Mid-end Value Premium Segment

38

1.2B 1.4B 1.6B 1.7B 1.8B

Including Apple


6% 11% 15%

26%

41%

0

100

200

2013 2014 2015 2016 2017

Uni

ts (M

) Touch Attachment on Notebooks

Touch Attach Rate (%) Total Notebooks

39

Source: IDC; Internal Estimates


Agenda

● Market Trends



40


0

600

1,200

2013 2014 2015 2016 2017

Uni

ts (M

) Accelerating Integration of Touch into Displays


Display Integration Discrete

41


Accelerated Conversion to Display Integration

Renesas SP Drivers Deal Closed on Schedule

42

Our Focus

● Accelerate TDDI platform

● Lead high-end DDIC segment

● Expand DDIC share in China

● Deliver full portfolio to Global Market

Engineering teams

integrated

Unified roadmap

accelerated

First jointly produced product to

ship in CY15

Strengthening Global LCM

Relationships


Touch IC Revenue SAM

$2.0 $2.2 $2.5 $2.7 $2.9

2014 2015 2016 2017 2018

$ B

illio

ns


Touch Revenue

43


Immediate Revenue SAM Expansion

$2.0 $2.2 $2.5 $2.7 $2.9

$2.5 $2.9

$3.3 $3.5

$3.7

2014 2015 2016 2017 2018

$ B

illio

ns


Display Driver Revenue Touch Revenue

44


Agenda

● Market Trends



45


Broader and Deeper Portfolio of Products

Discrete

SLOC In-Cell

TDDI

Discrete Touch and Display

Touch Sensor Integration

Touch Controller Integration

T D T D T D T+D

T = Touch D = Display

46


Innovation Across the Full Spectrum

47

2013 2014 0.0B

0.5B

1.0B

1.5B

2.0B

2015 2016 2017 2018

Feature & Performance Innovation on Discrete Touch and Discrete DDIC

Cost Innovation on Discrete Touch and Discrete DDIC


FHD+ Resolution

Sub-HD Resolution

High-end and Low-end Innovation Fusion for Display Integration

Optimization between Performance & Cost

HD/FHD Resolution


Addressing the Full Spectrum of Market Needs

2013 2014 0.0B

0.5B

1.0B

1.5B

2.0B

Sub-HD Resolution

FHD+ Resolution

2015 2016 2017 2018

HD/FHD Resolution

Discrete (Multi-Finger),

DDIC

Two-Chip and TDDI

Discrete (2-Finger), DDIC

Innovation across full spectrum

Source: DisplaySearch; Internal Estimates 48



Discrete

SLOC In-Cell

TDDI




T D T D T D T+D


49


Display Innovations

Touch Innovations

Time


● Proven technology and simple design

● Independent development timelines

● Fast time-to-market with new features

50


• Lowest total product cost

• Analog optimized in higher geometry processes

• Digital optimized in lower geometry processes

• 30% power improvement – industry lowest

System • Out-of-the-box noise performance

• “OneTouch” in-device tuning

• High performance pen

Analog

• Advanced features and performance

– Increased memory >100MIPS

• Powerful tool enabled guest thread

Digital

Discrete Touch Innovation

51


CAGRs

$

$1,000

$2,000

$3,000

2014$2,503

2015$2,929

2016$3,265

2017$3,543

2018$3,749

$ M

illio

ns

Display Driver SAM The Move to Higher Resolutions


52

$2.5 $2.9 $3.3 $3.5 $3.7

FHD: 25%

WQHD: 93%

qHD: -3%

UHD: 2241%

HD: 10%

WVGA: -22%

OLED: 7%


Display Driver Innovation

● Solutions for entry smartphones through high-end tablets

● HD720 to UHD resolutions

● World-class OEM support

Best-in-class Image Processing and Low Power

800

750

700

650

600

550

500

450

400

350

300

250

200

150

100 3 4 5 6 7 8 9 10 11

WVGA

UHD

WQHD

Full HD

HD720

Flagship

High-End

Middle/Low-End

R63242 [LTPS]

R633319 R63419/423

R63311 R63422

R61417/ R61322

[a-Si]

R61318

R63424 [LTPS]

R63319 R63420

SmartPhone/Phablet (HD720 to UHD)

Tablet

Panel Size (Inch)

Pix

el /

Inch

(ppi

)

53


Conventional ACO Local Area ACO

Billion Colors

First in the Industry to Support a Billion Colors

Local Area ACO (Auto Contrast Optimization)

● Contrast control by region

● Optimizes light and dark areas simultaneously

54




Discrete

SLOC In-Cell

TDDI




T D T D T D T+D

55


Touch Sensor Integration (SLOC & Two-chip In-Cell)

● Touch sensor integrated with display panel

● Thinner design with fewer layers – Brighter display

– Less sunlight reflection

– Improved image quality

● Single source touch and display vendor for OEMs

Simplified Supply Chain

Cover Glass

Touch Sensor Adhesive

Adhesive

TFT LCD

Discrete Touch Sensor

Cover Glass Adhesive

TFT LCD + Touch Sensor

Integrated Touch Sensor

56


Ramping Success of In-Cell and SLOC

Display Integration an Increasing Portion of SYNA Shipments

Oppo R809T (HD) In-Cell

Q3FY12 Sony Xperia P (qHD) World’s first in-cell smartphone

Q1FY14 Coolpad 8908 (HD) World’s first SLOC smartphone

Moto G (HD) World’s second SLOC smartphone

Lumia 630 & 635 (FWVGA) World’s first SLOC with Face Detect

Q4FY13 Pantech Vega Iron (HD) In-Cell

Q2FY14 Google Nexus 5 (FHD) World’s first FHD in-cell smartphone

Moto E (qHD) SLOC

Huawei Ascend P7 (FHD) In-Cell

Q4FY14 Amazon Fire Phone (HD) In-Cell, 3-D

Lenovo A398t+ (FWVGA) World’s first SLOC with air-gap, multi-finger, Face Detect+

Q1FY15 BlackBerry Passport (1440x1440) In-Cell

Moto G2 (HD) SLOC In-Cell

Huawei Mate 7 (FHD) In-Cell

OPPO R3 (HD) In-Cell

ZTE P892S20 (HD) SLOC PENDING

57



Discrete

SLOC In-Cell

TDDI




T D T D T D T+D


58


Latest Advancement Touch and Display Driver Integration

● Unified system architecture

● Synchronization of touch and display activity

● Embedded uProc

Two-chip Solution Single-chip Solution

Touch Detected

and Processed

Display Video Output

Host Processing

Touch Detected

and Processed

Display Video Output

Host Processing

Touch Controller Display Driver TDDI

TDDI Architectural Benefits Accelerate OEM Adoption

59


TDsync™

● Synchronization of touch and display activity

● Charger noise mitigation

● Significantly higher signal to noise ratio

● Greater accuracy and responsiveness

Advanced Noise Management; Best-in-class Capacitive Sensing Performance

0

0.1

0.2

0.3

0.4

0.5

0.6

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31

0

0.1

0.2

0.3

0.4

0.5

0.6

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31

Without TDsync

With TDsync

60


Lower Manufacturing Complexity

● Fewer components

● Fewer assembly steps

● Greater yield

● Lower cost

Full In-Cell TDDI Offers Lowest Cost Alternative

0%

50%

100%

GFF 2-Chip In-Cell TDDI In-Cell

Dis

play

Cos

t

61


Building Blocks to Build Full TDDI Portfolio

Display Driver Technology

62

HD

FHD

QHD

UHD

LTPS

a-Si

OLED

No RAM

1/3 RAM

Full In-Cell

Hybrid In-Cell

Touch Algorithms

Touch AFE

Display Type Resolution Memory System Architecture

Touch

Touch Technology

Synaptics Now has the Scale to Deliver Across the Full Market



Discrete

TDDI




T D T D T D T+D

• Fast time-to-market with new features and display resolutions

SLOC In-Cell

• Thinner form factors • Brighter displays • Simplified supply chain

• Advanced noise management • Best-in-class touch sensing • Lowest cost


63


Smart Display Platform

Touch Controller

Display Driver

TDsync™

Micro- processor Memory

Unified System

Architecture

Biometrics & Other Sensors

Platform for Future Innovation

● TDDI establishes a smart display platform for future innovation

● Enables new features, such as fingerprint sensing on glass

● Extensible to other markets, such as automotive

64


SDD Summary

65

RSP Integration on Schedule

Expanded Addressable

Market

Innovating Across

Architectures

Accelerating TDDI Platform

Solutions


(video)

66


BREAK

67

Advancing the Human Interface Scott Deutsch | SVP, Worldwide Sales


Agenda

● China Smartphone Market and Trends

● Synaptics China Milestones

● Building a China Team

● Synaptics China Strategic Advantages

● Summary

69


Smartphone Market

0200400600800

1,0001,2001,4001,6001,8002,000

2014 2015 2016 2017 2018

Low-end (%) <$200 ASP Mid-end (%) $200-400 ASP Hi-end (%) >$400 ASP

70

Source: IDC, Internal Estimates


0200400600800

100012001400160018002000

2014 2015 2016 2017 2018

NON-CHINA CHINA

Smartphone Market

71

Source: IDC, Internal Estimates


OEM China Smartphone Market Share

3%

6% 6% 7% 8% 10% 11%

16%

0%

5%

10%

15%

20%

25%

SEP13 OCT13 NOV13 DEC13 JAN14 FEB14 MAR14 APR14 MAY14 JUN14 JUL14 AUG14

Hisense

Nokia

K-Touch

ZTE

Gionee

Apple

Xiaomi

OPPO

Vivo

Huawei

Lenovo

Coolpad

Samsung

China Local Smartphone Makers are Leading China Market

72

Source: GFK


China Smartphone Market Trends

● China Carrier reduction in subsidies benefitting local brands, Xiaomi, Coolpad, Huawei, Lenovo, OPPO, etc.

● China brands have established retail and E-commerce channels

● Phone size continuing to get bigger, around 69% share are 5.0’’- 6.0’’ phones in 2015

● Touch display integration solution is expected to simplify the supply chain in China

● China is accelerating Fingerprint adoption

73


China Payment Ecosystem Trends

● Launch of ApplePay accelerating mobile payment ecosystem in China

● Alipay, Unionpay and Tenpay are leading payment companies in China

● Alipay highest share at 49% in China and offers mobile wallet for US sites

● Fingerprint and NFC technology will accelerate with mobile payment

Market Share of Main Players in China Online Third-party Payment in 2013

Alipay

Tenpay

Unionpay Online

99 Bill

Chinapnr

Yeepay

iPS Others

49%

19%

11 %

7%

6%

3%

3% 2%

74


Synaptics China Milestones

TCL SmartWatch

MP SLiM low-end phone MP at

ZTE and MSFT Beijing

Gen2 In-Cell MP at Huawei

Engaged with top China LCM’s for

display integration

OPPO Flagship Phone MP with gestures

SLOC low-end phone MP at Coolpad and Lenovo Xolo Q2100 Raptor

Fingerprint MP

Gen3 In-Cell MP at Huawei Mate7

Q1FY14 Q2 Q3 Q4 Q1FY15 Q2

Engaged with Tianma

Strategic Partnership with Ofilm for Fingerprint

HD TDDI MP at multiple customers

Team expanding move to Shanghai new office

and RSP integration

Single Layer Solution Low-end Phone MP

China local Engineering Team

Display Integration Product Time-to-Market and Ecosystem Establishment

BOE SLOC MP for top OEM,

two-chip FIC/HIC ready for MP

Tianma SLOC MP

75


Our Products in Key Chinese OEM’s

ClearPad for Mid- and Low-end Smartphones and Tablet

ClearPad High-end Family For Flagship Smartphones

Vivo X5

Lenovo Vibe X2

Gionee Elife S5.1

Meizu MX4

Oppo R3

Vivo xplayer 3s

OPPO N3

IUNI U3

OPPO R5

Huawei Mate7

ZTE Nubia Z7 Max

Huawei C199

ZTE 清漾2S

Huawei Honor6

ZTE 小星星

Coolpad Y1

Huawei Honor 4x

Huawei Ascend G620s

Huawei Honor 3X

Vivo Y22

Xiaomi Pad

76


Synaptics’ China Headcount

● 1 team – many great ideas

● Innovation accelerates

● FY15 growth – 100+ sales and FAE’s – 50+ R&D, QA

0

50

100

150

200

FY13 FY14 FY15

77


China Channels Development

● Established total 10 distributors to grow the broader customer (IDH) business with structured strategies and approaches

● Expanded channels into fingerprint and display integration business in China

FY13 FY14

ZI HUAN

FY15

Total 10 VARs in China and Continuing to Develop More

E-Shine

78


OEM Adoption

Synaptics’ LCM to OEM

LCM to OEM Advantages

LCM Investment

Display Integration

79


Display Integration Trends in China

Lenovo, ZTE and other OEM’s are using SLOC

for low-end phones

SLOC

Multiple OEM’s moving

to MP now

TDDI

Multiple Huawei phones, OPPO and

Smartisan in MP. Additional high-end

phones moving to MP.

2 CHIP IN-CELL

Chinese Top 10 OEMs are Leading the Display Integration Trend

80


Leading Position in Market

We are the only one to provide China customers with Touch, TDDI, DDIC and Fingerprint total solution today

Best DDIC Best Fingerprint

Best Touch

81


Handset Price Band

CQ2’14 China Touch Smartphone Market Share

Source: Barclay’s, Internal Estimates

>$150 $150 - 250 $250+

Uni

t Vol

ume

(M)

Synaptics Competitors

82

32Mu 58Mu 40Mu


Y/Y Growth China Touch OEM Revenue

32% 46%

Q4FY13 Q4FY14 Q1FY14 Q1FY15Revenue Y/Y Growth

83


Continued Investment

in Resources and Channels Leading to Sustained China Business Growth

Broadest Portfolio of Solutions and

Local Engineering Will Enable Local

OEM’s to Compete Globally

China LCM’s and OEM’s Are

Leading the Display Integration

Technology Transformation with Synaptics

China Payment Ecosystem is Accelerating Fingerprint Adoption

Summary

84

Advancing the Human Interface Ritu Favre | SVP, GM of Biometric Products Division (BPD)


Agenda

● Market Overview

● Benefits of Biometrics

● Guest Speaker: Michael Barrett

● Market Opportunity

● Product and Market Strategy

86


Biometrics Gaining Traction

Market trends show very strong growth across mobile, tablet and notebook PC segments

Adoption is Accelerating; Attach Rates

Growing

Active Programs at all Major

OEM’s

Fingerprint Sensors are

Moving Beyond High-end

Smartphones

Industry Leaders are Fully

Committed to Biometrics

87


Fingerprint Sensors Enable OEM Differentiation

Biometrics enable OEMs to offer differentiated products in a crowded market space ● Industrial design differentiation

● User experience differentiation

Device Unlock

Online Payment mPayment

User Authentication

88


Convenient Security is the Compelling Application

Biometrics promise superior convenience and security for digital lifestyles ● Need to secure online persona without compromising convenience

● Interoperability standards for online authentication are essential

● Synaptics is working closely with FIDO on multiplatform standards

FIDO enables strong local device authorization for online authentication by specifying an open and interoperable protocol that can be implemented by any device and on any service.

89


Introducing Michael Barrett

President FIDO Alliance

Former Chief Information Security Officer PayPal

Twice named one of the 50 most powerful people in networking by Network World magazine

Security Technologist, Open Standards Advocate, and Privacy Champion

90

© 2014 FIDO Alliance

Who… What… Why…

92


142+ & growing…

94


142+ & growing…

95

To Change Authentication Online by:

(a) Developing unencumbered Specifications that define interoperable

mechanisms that supplant reliance on passwords

(b) Operating programs to help ensure industry adoption

(c) Submitting mature Specifications for formal standardization


FIDO Alliance’s Role…

• “Paper” Specifications

• Interoperability and Conformance testing

• Trademark licensing against criteria

• Thought leadership, nurture ecosystem

• The Alliance does not ship products!

• Implementations left to commercial vendors


Why Authentication is Cybersecurity Priority #1

Poor authentication mechanisms are a commonly exploited vector of attack by adversaries; the 2013 Data Breach Investigations Report (conducted by Verizon in concert with the U.S. Department of Homeland Security) noted that 76% of 2012 network intrusions exploited weak or stolen credentials.

-- NIST Roadmap for Improving Critical Infrastructure Cybersecurity,12-Feb-2014


Today’s Passwords


REUSED PHISHED KEYLOGGED

99

Today’s Password Alternatives One Time Codes with SMS or Device


SMS USABILITY

Coverage | Delay | Cost

DEVICE USABILITY

One per site | $$ | Fragile

USER EXPERIENCE

User find it hard

STILL PHISHABLE

Known attacks today

100

Major Industry Trend Simpler, Stronger Local Device Auth

PERSONAL DEVICES LOCAL LOCKING NEW WAVE: CONVENIENT SECURITY

Carry Personal Data Pins & Patterns today Simpler, Stronger local authentication


Putting It Together

The problem: Simpler, Stronger online The trend: Simpler, Stronger local device auth Why not: Use local device auth for online auth?

This is the core idea behind FIDO standards! © 2014 FIDO Alliance 102

FIDO Experiences LOCAL DEVICE AUTH SUCCESS ONLINE AUTH REQUEST

PASSWORDLESS EXPERIENCE (UAF = Universal Authentication Framework)

SECOND FACTOR EXPERIENCE (U2F = Universal 2nd Factor)

Show a biometric Transaction Detail

Done

Login & Password Insert Dongle, Press button Done 103

State of Market Adoption


Version 1.0 is in Public Review

105

13 products have satisfied the requirements of our testing program and earned the right to use the FIDO Ready™ trademark.

106


OEMs SHIPPING FIDO-READY™ PRODUCTS New and existing devices are supported

OEM Enabled: Samsung Galaxy S5 OEM Enabled: Lenovo ThinkPads with Fingerprint Sensors

Clients available for these operating systems :

Software Authenticator Examples: Voice/Face recognition, PIN, QR Code, etc.

Aftermarket Hardware Authenticator Examples: USB fingerprint scanner, MicroSD Secure Element

107


First FIDO Deployment already live…

• Customers can use their finger to pay with PayPal from their new Samsung Galaxy S5 because the FIDO Ready™ software on the device securely communicates between the fingerprint sensor on their device and PayPal’s service in the cloud. The only information the device shares with PayPal is a unique cryptographic “public key” that allows PayPal to verify the identity of the customer without having to store any biometric information on PayPal’s servers.

108

From July 2014… • Alipay – formerly a part of

Alibaba Group in China • Processed $519 Billion in

transactions in 2013 • Launched FIDO-based payments

using Galaxy S5


THANK YOU

110


Biometric Market Opportunity

2013 2014 2015 2016 2017 2018

Uni

ts (M

u)

Mobile Tablet Notebook PC

200

400

600

800

1000 2015-2018 CAGR:

+40% • Accelerating adoption

in low- and mid- end devices

• Strong attach rates driven by low cost solutions, benefits of online authentication and mobile payment

Source: IDC, Gartner Excludes Apple

111


Korea and China Drive Volumes and Growth

Korea Today Represents Majority of Fingerprint Sensor SAM

Growth is Driven by China Market

112


Competitive Landscape

Great opportunity attracting new participants ● Strong demand leading to numerous entrants

● Numerous sensing methods promoted

● Race to optimize cost, size, performance, ease-of-integration and ecosystem compatibility

113


Synaptics Well-Positioned to Lead the Market

Synaptics Drives Market Success with Total Solution Offering

Product Benefits

Corporate and Ecosystem Strengths

Strong IP Position

• Mature core technology • System integration and human factors expertise • Strong security solutions • Disaggregated sensor/silicon

• Supply chain logistics • In-region design centers • Ecosystem partnerships

• Deep domain knowledge • Capacitive sensing patent portfolio • Proprietary algorithm development

114


Synaptics Fingerprint Biometrics Vision

Expand the use of fingerprint authentication across all smart devices by providing premier ‘whole system’ solutions

Innovate and Integrate to improve ease-of-use and security for end user Improve ease-of-integration, industrial design and cost impact for the OEM

Enable Cloud Services and Mobile Payment Ecosystem to make fingerprint biometrics the standard for user authentication

115


Biometric Product Development Path

Deliver Compelling Benefits to OEMs and End Users Via: ● Optimized performance and usability ● Advanced integration ● Lowest solution cost

Small Area Touch Sensors

Slide Sensors Glass and Touch Pad Integration

Active Display Integration

Current Future

116


2014

Area Sensor

Slide Sensor

Biometric Feature Roadmap

Lowest TCO

Ease of Integration

Strong Security

Increased Thickness Sensing

Configurable Array Size

Under Glass Integration

Expanding Payment Ecosystem

117


Portfolio Strategy

Drive Superior Differentiation and Usability

Push Technology Further and Faster • Diversified portfolio • Integration • Solution cost

Leverage UX Experience

• Develop new user models

• HF resource for OEM’s

Widen Lead in Strong Security • Optimize security

architecture • Drive online/

mPayment standards

118


Market Strategy

Increase Focus and Support for Key Markets

Increase Focus on China

• Address growing and emerging opportunities

Scale Support

• In house support • Strategic partner and

IHV relationships • Shorten design cycles

Build on Synaptics’ Core Businesses • Leverage leadership

position • Customer and

supplier relationships

119


Biometrics – Hyper Growth Market

Fast Paced Market

High Growth Potential

Synaptics is The Leader

Total Platform Solution

Strategic vision and agility needed

to maintain leadership

Market trends outpacing

expectations

Volume leader in target markets

Provides key differentiating

advantage

120

Advancing the Human Interface Kathy Bayless | SVP, CFO and Treasurer


Revenue Growth Trend

Strong Long-term Growth Trend Growth Accelerates: FY13 + 21%, FY14 + 43% & FY15 + 70%

361 473 515 598 548 664

948

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

PC Mobile

2008-2014 CAGR:

+17%

$(M)

FY15 – Street Estimate

122


Net Income & EPS Trend

Strong Long-term Growth and Profitability Trend

$(M)

51.7 77.9 80 88.9 78.7

106

158 $1.31

$2.19 $2.26 $2.51 $2.28

$3.11

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$0

$40

$80

$120

$160

$200

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15Non-GAAP Net Income EPS

$4.25

2008-2014 CAGR:

+20%

FY15 – Street Estimate

123


7 Year Cash Trend

$35 $129

$210 $247

$305 $355

$447

$76 $82

$114

$90 $101

$102

$132

$0

$40

$80

$120

$160

$0

$100

$200

$300

$400

$500

FY08 FY09 FY10 FY11 FY12 FY13 FY14

Cash Cash From Operations

$(M) 2008-2014 CAGR:

+53%

124

Highlights + $697M from Operations (17% of revenue)

+ $508M Stock Buyback (73% of cash from ops)

Deployment • Invest in core markets to drive growth

• Strategic investments to expand TAM

– ~$463M purchase of RSP in FY15

– $250M debt proceeds in FY15

• Current share repurchase authorization

– $150M thru July 2016


Strong Financial Growth

FY 2015 Street Estimates

• Record revenue ~$1.6B

• New products drive revenue growth Fingerprint, DDI, TDDI

• Revenue growth drives:

– Net Income

– EPS

In ($M) 2013 Act

2014 Act Growth %

Revenue $664 $948 43%

Gross Margin $327 $444 36%

Op Profit $135 $189 41%

Net Income $106 $158 48%

EPS $3.11 $4.25 37%

125


Q1FY15 Results and Q2FY15 Outlook

Q2FY15 First Full Quarter Combined with RSP

In ($M) Q1FY15 Act

Revenue $283

Gross Margin $125

Op Profit $49

Net Income $41

EPS $1.04

126

Q2FY15 Guidance (with RSP) Revenue: $415M-450M > Double YoY

GM: 34-36% • Product mix including RSP • Transition cost & steep new DDI product ramp

Cash interest expense ~$1.2M

Tax rate: 16-18%

EPS: $1.00-1.30


RSP Acquisition

Strategic acquisition ● Advances display integration product roadmap

● Drives TDDI market penetration

● Opportunity to expand DDI business

Acquisition price ~$463M ● $350M paid Oct. 1 (109.4 JPY rate); ~$113M to be paid in ~90 days & 18 months

● Financed with our foreign cash and $250M of bank debt

Immediately accretive

127


RSP Annual Financial Trends

In ($M) Year Ended March 31, 2014

Year Ended June 30, 2014

Revenue $642 $684

Gross Margin $236 $243

Op Profit $162 $161

Net Income $104 $102

128

RSP FY15 • Revenue driven by premium

smartphone market; market has limited growth in FY15

• GM reflects customer & product mix; trended lower from March 2014

• Op expense trended up pre-acquisition to support newer products for CY15


Target Financial Model

Post FY15 Revenue Growth Target – 15-20%

Model Post RSP Transition Period

Gross Margin 37 – 40%

R&D 16 – 18%

SG&A 6 – 8%

Op profit Mid to High Teens %

Tax Rate 16 – 18%

Net Income Low to Mid Teens %

129


FY15 Financial Priorities

Drive revenue ~$1.6B (street est.)

● Core business growth strong: low 20’s %; FP primary driver

● Leading product portfolio; OEM & LCM support teams

Expand GM & operating margins

● Move RSP from Renesas to Synaptics systems

● Eliminate Renesas transition costs in GM

● Invest to accelerate TDDI and Fingerprint market adoption

Drive FY15 actions across the business to fuel long term growth

130


Summary

Synaptics Drives Significant Value for Stakeholders 131

Leading Product Portfolio

Sustainable Market

Leadership

Drives Profitable Growth

Financial Performance

Thank You!


www.synaptics.com

2014 analyst and investor day presentation v2

Documents

forwardlooking statements

business trends

synaptics incorporated

business sections

business environment

business combinations

securities act

results of operations