Synaptics is acquiring the iPhone display chip maker Renesas

Synaptics has reached a deal to buy iPhone display chip maker Renesas after talks on a potential deal between Renesas and Apple fell through, Reuters reports. Synaptics is a former Apple supplier, but now provides parts for competitor Samsung’s flagship smartphones. Analysts predict that Synaptics will integrate its own touchscreen technology with the display chips created by Renesas to cut manufacturing costs and create an all-in-one solution that is currently unrivaled in the market. That could be good news for Apple, who will presumably continuing sourcing its iPhone display chips from Renesas after the deal is finalized. While it would likely have been a better deal for Apple to simply acquire Renesas and do everything in-house, Synaptics is now in a solid position to regain Cupertino’s business.

Touchscreen chipmaker Synaptics Inc said it would buy the sole supplier of display chips for the iPhone for $475 million, potentially winning back Apple Inc as a customer. Synaptics’s shares jumped 19 percent in extended trading after the company also raised its revenue forecast for the fourth quarter ending June 30. Reuters had reported last month that Apple had failed to make progress in talks to buy Renesas Electronics Corp’s majority stake in the Japanese chipmaker Renesas SP Drivers Inc, paving the way for Synaptics to strike a deal. Synaptics would integrate its touch technology with Renesas’ display drivers into one chip, saving manufacturing costs, Feltl & Co analyst Jeffrey Schreiner said. “There is no one else that can do touch display driver integration right now. There is no other competitor.” Synaptics, whose chips are used in Samsung Electronics Co Ltd’s devices such as Galaxy S5 smartphones and Galaxy Note 3 phablets, was once itself a supplier to Apple. Renesas Electronics holds a 55 percent stake in Renesas SP Drivers, while display maker Sharp Corp has a 25 percent stake and Taiwan’s Powerchip holds the remaining. Synaptics said on Tuesday that the deal was expected to immediately add to adjusted profit after its expected close in the fourth quarter.