Synaptics plopped down $305M on DisplayLink, two weeks after buying a wireless IoT operation from Broadcom.
Synaptics pulled off its second acquisition in the space of two weeks, this time nabbing DisplayLink Corp., for $305 million in cash. At a macro level, DisplayLink’s business is designing ICs and generating software to support universal docking stations, but the key to the deal, Synaptics said, was a fundamental enabling technology: DisplayLink’s data compression.
Casting video is going to become more and more common, and Synaptics thinks it can be a key enabler of that trend by combining its own products with the technologies it just picked up through the two acquisitions.
Earlier this month, Synaptics bought a wireless IoT operation, along with the rights to some wireless IP, from Broadcom for $250 million. Synaptics will combine the acquired Wi-Fi, Bluetooth, and other wireless technology with its own SyNAP chip for IoT applications. The SyNAP SoC integrates voice, audio, video, computer vision, machine learning and security. Combining the IoT chip with wireless connectivity, the company said, strengthened its Internet of things (IoT) business.
Both Synaptics and DisplayLink provide enabling technology for docking stations, and they both sell to Dell, HP, and Lenovo. Oddly enough, they have minimal overlap, however, and because there’s minimal overlap, the addition of DisplayLink will be almost entirely accretive, Synaptics said.
The first difference between the two companies is that their respective product lines sell through different channels. Synaptics’ products are sold mostly in the commercial market, while DisplayLink’s tend to be sold through retail channels, Synaptics pointed out in its conference call with analysts and reporters today.
Another difference is in the nature of their respective dock products. Until relatively recently, any given docking station would work with only one brand of computer – just Dells, for example. Synaptics’ docks fall into this category. A few years back, universal docking stations began to hit the market, however. These are docking stations that will support any PC, any operating system (including Windows, MacOS, ChromeOS and Ubuntu Linux), and any major connectivity option (USB, Ethernet, WiFi, etc.). DisplayLink, founded in 2003 in the U.K., provides hardware and software for many of them.
But the key difference is in their operating specifications. Synaptics technology supports data throughputs up to 26 Gbps. DisplayLink technology supports throughputs nearly quadruple that — 96 Gbps, using dynamic compression.
What Synaptics really wanted was the compression technology, as data compression will become more critical with trends and time.
“Several market trends such as work from home (WFH), bring your own device (BYOD) and office hoteling coupled with the growing need for multiple, high resolution displays in enterprises are driving demand for universal docking and casting solutions,” said Michael Hurlston, president and CEO of Synaptics, in a statement.
In the conference call, Hurlston went further. Synaptics expects to see more wireless docking — and the wireless networking capabilities it just acquired from Broadcom should help with that.
Perhaps more important than wireless docking will be wireless casting — sending video from one device to another display screen. Synaptics has also spent the last few years developing an Android-based set-top box, and the ability to perform wireless transfer at high data rates will be extremely useful.
“We can use it with over-the top streaming,” Hurlston said. (“Over the top” is video industry lingo for services such as Netflix that aren’t available through traditional pay-TV services). “With wireless docking and wireless casting,” Hurlston continued, “you take video off a phone or a PC and throw it on a TV. That’s where we see the use cases.”
The company said that DisplayLink’s technology should eventually be capable of driving up to four 4K displays, or a single 8K/10K display. Conversely, those compression capabilities also come in handy for squeezing higher-quality video through legacy connections like USB-A, Hurlston said.
Also in the roadmap for future products is support for USB 4.
The deal is likely to close in Synaptics’ first quarter. The company is expecting some operational expenditure (opex) synergies — that usually means layoffs. Additional synergies will come from shifting DisplayLink over to what Synaptics called its engineering platform. Synaptics execs said on the conference call that DisplayLink’s opex is 50 percent of revenue, while their own was closer to 30 percent of revenue.