When Rhode was asked by a financial analyst whether September’s
anticipated quarterly growth is due to unit-base growth or an average
selling price increase, Cirrus Logic’s CEO responded that the question
is a sensitive one to answer -- because it relates to its “customers.”
Rhode said, “It’s a little bit of all.”
Further, when asked about
the overall tablet market trend in Q3, Rhode declined to comment,
leaving the impression that he’d been warned not to tip off Apple’s
upcoming product (iPhone 5 or iPad mini) in Q3.
The Cirrus Logic
CEO was also quizzed about the state of the company’s overall audio chip
business “except for the biggest customer.” Rhode said the audio
business for the broad consumer market had “a decent Q1” and expects
reasonable demand in the second half of this year. Pressed further if
the consumer market in general for the third quarter is dire, Rhode
pointed out that Cirrus Logic’s chip business except for the biggest
company is rather small, implying that it’s not big enough to deduct the
overall industry trend. “But it doesn’t look bad either,” he added.
Cirrus Logic’s behavior -- jealously guarding the name of its biggest
customer -- and the financial community compliance strikes an odd note,
especially since Cirrus Logic on Monday filed Form 10-Q with the SEC. In
the form, it reported: “We had one end customer, Apple Inc. that
purchased through multiple contract manufacturers and represented
approximately 59 percent and 53 percent of the Company's total sales for
the first quarter of fiscal years 2013 and 2012, respectively.”
an SEC filing make this hip-to-hip relationship pretty obvious?
of course, Apple is famous for its almost totalitarian approach to
non-disclosure agreements. One chip company on Apple’s 2011 Suppliers list released earlier this year
said, “At my company, practically one third of our entire employees were
asked to sign the NDA by Apple.”
It’s understandable that a
component supplier shouldn’t be out there pre-announcing its customer’s
product. But the gag order against uttering the magic word “Apple” all
during the conference call with financial analysts was awkward at best
and at worst, outright Orwellian. It undercuts the credibility of
detracted from the company’s otherwise forthright business discussions.
Rhode, meanwhile, tried to highlight the company’s efforts
to broaden its customer base and expand its business.
notable for Cirrus Logic’s recent quarter is the design win in Philips’
A19 LED light bulbs. (A19 is a type of light bulbs most commonly found
today in the United States. It has a standard medium base and can screw
into a variety of sockets.)
Philips A19 LED light offers a fully
dimmable LED alternative to a standard light bulb and provides a soft
white light by using Cirrus Logic’s LED controllers.
entered the LED market in March 2012 with the first product in its LED
controllers, focused on solving dimmer compatibility issues. Fundamental
to Cirrus Logic's LED product family is the company's digital
technology, called TruDim, consisting of interface algorithms, LED
driver topologies and system architectures. Cirrus Logic claims that
TruDim digital intelligence allows the controller to identify the type
of dimmer in use and adapt its dimmer compatibility algorithm to provide
smooth dimming in much the same way the consumer has come to expect
from decades of using incandescent light bulbs.
near 100 percent compatibility with the world's installed base of
dimmers, the company’s newest CS163X family provides “two-channel LED
color mixing capabilities,” according to Rhode. The company claims that
it allows LED bulb manufacturers to more efficiently create warm,
natural light quality while also lowering the cost barrier for
two-channel LED retrofit bulbs.
Cirrus Logic would have been a good acquisition target for Apple if not for its current market valuation of 2.4B which is 10 times its 2009 valuation. The current valuation is basically because of its Apple business and the day Apple finds another vendor, Cirrus logic stock will nose dive, which will again make it a good acquisition target for Apple. Convoluted hah?
OK. I got the logistics of how Apple can buy Cirrus at a reasonable price.
What I don't understand is the reasons why Apple would every want to buy any perifpheral chip companies (including Authentic acquisition announced yesterday: http://www.eetimes.com/electronics-news/4391386/Apple-to-acquire-fingerprint-chip-firm-Authentec)
Would anyone care to walk me through its pros and cons?
Apple would want to acquire chip/other companies for several reasons.
1) it has 100B cash in Bank and investors are pestering them to use it somehow :D
2) Block access to key & uncommon tech to competition (Anolbit,Authentec)
3) Bring inhouse the key and high value components (CPU, maps) so that there dependency on others are reduced. (PAsemi, integrity, C3 ,Placebase)
Actually Cirrus logic doesnt fall into key tech/uncommon/high value components. Hence Apple will have less motivation to acquire them.
I agree with your assessment -- especially on Cirrus front. But then, here's the thing. That means, while Apple has everything to win, Cirrus will everything to lose, once it gets designed out. Shouldn't Cirrus get compensated for this very lopsided position they are now in?
I have another separate question for everyone.
i wrote in this story: Cirrus Logic’s behavior -- jealously guarding the name of its biggest customer -- and the financial community compliance strikes an odd note, especially since Cirrus Logic on Monday filed Form 10-Q with the SEC.
In fact, in the 10-Q, Cirrus Logic reported: “We had one end customer, Apple Inc. that purchased through multiple contract manufacturers and represented approximately 59 percent and 53 percent of the Company's total sales for the first quarter of fiscal years 2013 and 2012, respectively.”
So, I am still scratching my head why NOBODY in the conference call would NOT mention the name Apple at all.
Except that Apple used a different audio vendor for Gen 1, maybe also Gen 2, and Cirrus beat them out of that socket for successive generations.
Could Cirrus be displaced in the future? Anything is possible, but once you're this deeply entrenched and making custom ICs for your biggest customer, I think you'd have to really screw up badly to lose the business at this point.