SAN JOSE, Calif. - Cirrus Logic Inc. has a production problem with an audio device-a move that impacts Apple Inc., according to a report from The Wall Street Journal. That can be read here.
In a release issued on Thursday (April 15), Cirrus said gross margin for the quarter is expected to be approximately 50 percent, below previously issued guidance of 54 to 56 percent. ''The company's lower-than-expected gross margin for the quarter is the result of a charge of approximately $4.2 million, or $0.06 per share, based on 72.3 million diluted shares outstanding, due to a production issue with a new audio device that entered high volume production in March 2011,'' according to the Austin, Texas-based chip maker.
The company said it expects a smaller residual impact to gross margins in the first two quarters of FY2012 as the company works through in line inventory related to this product. Cirrus Logic's stock hit $16.14 in mid-afternoon trading on Friday (April 15), down 10.86 percent.
Cirrus did not mention any customers by name, but Apple represents about 50 percent of its overall sales, analysts said. ''Apple has been a major success for Cirrus, however it brings along the high risk/high reward trade-off in the form of customer concentration vs. growth. It also overshadows other product developments and the strong fiscal execution of the company over the last three years,'' said Vernon Essi, an analyst with Needham & Co. LLC, in a report on Cirrus late last year. ''We expect Apple to account for 56 percent of revenue in FY12.''
Cirrus has won some audio chip business for the iPhone and iPad2. In the iPad2, there is an Apple-branded 338SC940 Cirrus Logic CLI1S546A0 audio codecin the system. Cirrus Logic's CLI1495B0 audio codec is inside the Apple iPhone, which is sold by Verizon.
Meanwhile, the chip maker, a supplier in high-precision analog and digital signal processing components, Thursday announced preliminary unaudited financial results for the fourth quarter and for fiscal year 2011, which ended March 26, 2011.
Revenue for the quarter is expected to be approximately $91.4 million, in line with guidance, representing a 46 percent increase over the $62.6 million in revenue for the fourth quarter of fiscal year 2010, and a 4 percent decrease from $95.6 million in the third fiscal quarter. Revenue for fiscal year 2011 is expected to be approximately $369.6 million, a 67 percent increase over $221 million fiscal year 2010 revenue.
"FY2011 was an outstanding year for Cirrus Logic as revenue growth and operating profit improvements exceeded our own high expectations," said Jason Rhode, Cirrus Logic president and CEO, in a statement. "I'm pleased with the team's success in meeting our customers' demand despite the challenges resulting from a low-yielding product during a major production ramp in March. Design win activity remains excellent and I remain very excited about the future for Cirrus Logic."
In January, Cirrus announced financial results for the third quarter of fiscal year 2011, which ended Dec. 25, 2010. Revenue for the quarter was $95.6 million, up 47 percent compared to the same quarter a year ago, and down five percent sequentially from the previous quarter. GAAP net income for the quarter was approximately $24.6 million, or $0.34 per share, based on 71.7 million average diluted shares outstanding.
The company is seeing growth in several areas. Last year, Cirrus unveiled the industry’s first digital power factor correction (PFC) controller ICs that surpass analog PFCs on performance and price. The CS1500 and CS1600 offer power supply and lighting ballast system designers improved performance and simplified designs compared to legacy analog PFC products.
I'm sure it's not as dramatic as all that. The article that was posted on today's EE Times talked about a production test that was inadequate in catching all failures on some spec parameter. After the test was made more rigorous, yields fell.
Why should end customers care what the ppm reject rate is on finished units at the factory? As long as the price of the iPad stays the same, the manufacturing yields and gross margins are problems for Apple and Cirrus, not for the end customer.
Doubtful. If you try to look up the CL part number for the part listed in the iPad2 teardown analysis, you can't find a data sheet or any info about it anywhere. This leads me to believe it was a custom part made specifically for Apple.
For Wolfson or anyone else to start a new design to Apple's specs and get it into production would be quite a long process.
Besdies, Apple designed out Wolfson several generations ago. Hard to imagine them going back in that direction now.
Will apple phones and iPad be on a shortage?
Perhaps this will actually benefit Apple as the scarcity principle might become a good hook to drive public appreciation of the "gizmos".
Looks like this device is a new chip. Isn't using a new chip a little risky? Is apple becoming an early adopter? Well, I guess this is the only way to hit the market with the final frontier of technology. Some are innovators and some like to play it safe. Sometimes you have to make a trade-off don't you think?
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