Cirrus Logic Inc at Oppenheimer Technology, Internet & Communications Conference (Virtual) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : Yeah. These decades tick by. So, maybe, I'll just kick things off, if I could, kind of a high level, I guess. I mean, Cirrus has been in every iPhone, I think, since the beginning, your largest customer. I think it accounts about 90% of revenue. And if you assume handsets is mature market, which I know admittedly is a big assumption, but if you assume that that's sort of a mature market, I mean, can you walk us through sort of your primary strategy for growth? I mean, is it centered on generation or content gains there your top customer, because obviously you guys have been a [practice den] and very adept at that, over time. And maybe as part of your answer, I don't know how much color you want to give, but maybe if you could walk us through a little bit of -- or tease us a little bit about sort of where the bigger opportunities are going forward for further content gains.

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : Thanks for all that detail. Really appreciate it. A question I've had certainly (inaudible) as well. But just I'm curious, you guys have posted some pretty remarkable upside the last few quarters. And I don't know if you could just give a little bit of color on your forecasting process or just trying to understand better sort of how some of those surprises came about. Again, it's several quarters in a row, again, kudos for the significant upside, but just trying to sort of understand the process there a little bit better.

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : All right. Got it. No, thanks for all of that. I might pivot, if I could, to PC just because that's kind of an exciting, relatively new opportunity for you guys in PC power converter, obviously, greenfield opportunity for Cirrus. And I was hoping you could speak just for a second about where in the PC Cirrus power is winning and maybe you can talk about who you're winning against primarily, you're beating in that space. And what's the strategy there within PC? Because that's kind of a new channel for you. Correct me if I'm wrong, but it seems like a relatively new channel for you that you've got to sort of green shoot grow. And so is it the same kind of idea that if you go back in time, 10, 15 years, you did in hindsight where you sort of lead with audio in this case, do you lead what sort of power converter, get your foot in the door, land and expand, you know what I mean, and then you start branching out where you're selling codecs and you're selling all your [amps] or whatever -- rest of the lineup into PC over time. So, again, as you grow that that new channel.

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : And speaking of that, I mean, I know that I think I've heard you say a few times that you hope in the next few years PC could rival sort of Android in terms of contribution to your top line. And I don't know if you want to expand on that at all, just only because, as you said, relatively greenfield market for Cirrus, it's at least a [250 million-unit TAM]. I mean, it's a massive market potential, right, to be sort of growing into and especially as you start thinking about this lineup of potential SKUs that you can be selling into a PC. So I didn't know if you could just touch on why, you don't think that it could be bigger than Android for you guys given the relative size of Android in your model right now versus iOS? And then I was just curious if you just kind of go out there on either talk about the PC TAM or talk about what your actual versus potential content per PC could be, something like that.

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : Well, thanks for all the detail. And I should have asked this part of my question. Is there any -- are you relatively agnostic, whether it's an Arm based PC or whether it's X86? Does that move the needle materially for you guys, or is it just curious -- (multiple speakers) potential content.

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : Thanks, John. So, pivot again, that's right, to AI, kind of stealing a lot of the sunshine, bringing cheer on particular for the Group. I know there's a lot of talk about moving compute more to the edge, i.e., PC handset, whatever. And your largest customer has been a leader in AI systems forever now deploying their own GenAI. So, I'm just curious of your perspectives, do you think AI is going to drive a meaningful either TAM increase or refresh cycle or anything that's going to help Cirrus Logic, I don't know if you could talk about sort of your quote-on-quote AI play, like how did you, guys, finish that?

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : And just since you mentioned camera at the end there, I mean, there's a lot of talk about, your largest customer potentially switching vendors for their camera. Does that matter to Cirrus Logic? I mean, are you going to support Samsung, Sony? Does it matter to you, guys?

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : Another question I have, I keep asking is these random questions. But your largest customer has a lot of stuff in the press about them potentially beginning to insource their own modem, their own baseband next year. And I didn't know for Cirrus Logic, does that in any way, shape or form -- it may be a dumb question but is the impact usually a positive, negative, any impact at all potentially to Cirrus Logic, if they happen?

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : Okay. No, thanks. I just wanted to check that box. And then something I haven't heard you mention again, I did hear you clearly say you're not hype merchants. And I think I don't think anybody would accuse you of that. But some of the bigger names in the supply chain for your biggest customer, the folks that actually make a lot of their devices have told us repeatedly, first hand, that haptics for the side of the phone, replacing the mechanical power, mechanical volume buttons, that's an (inaudible) project and that could come back. I haven't heard a timeline or anything on that and I don't know how much you (inaudible). I know you guys have said, as far as you're concerned, it doesn't happen. And again, maybe goes back to your MO as not being hype machines, but what can -- if anything, what can you say about the potential there? It seems like it's alive, and in sometime in the future.

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : Yeah. Fair enough. Maybe I pivot to, you mentioned a couple of times some of the new products you've got coming out and obviously the new 22-nanometer codec, I mean, I'm curious there. I know there's obviously some startup costs associated with that and you're probably improving yields and everything's still in the normal cycle of things, new products. But in the past, we've seen like when you guys moved to 35 nanometer, like you said, I've lost track of six years ago, whenever that was, you did benefit on the gross margin line, and it definitely showed up. You guys kind of ticked up into the mid-50s and I'm just trying to understand the puts and takes this time on this transition. And could we see a similar benefit for a while in the model or and I don't know how much you could share on that, but I'd be curious your thoughts.

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : Perfect. And I know we've got about a minute left. So I'll sneak one in just because I want to use every second of time I get with you. But I think you do (inaudible) I believe remains 55 nanometer, I'm sure, you'll correct me. If I'm right, I'm just curious, what was the thinking there as you're moving kind of to 22, like quite a lag, I guess, on that transition for boost to happen? And by the way, second part of that, it's just that you may not know the answer to this, but what's a general rule of thumb gen to gen with ASPs, when you make a leap like this and maybe it doesn't apply or maybe it does apply to boosted amps, even though you stayed on 55 nanometer. And is there a rule of thumb on ASP improvement?

Question: Rick Schafer - Oppenheimer & Co., Inc. - Analyst : Okay. That's very clear. So anyway, John, taking a minute or so, but I really appreciate it. It's fun catching up. Great to see you. And thanks so much for your time and your candor today. I thank you and our discussion.