updated 01:16 am EDT, Fri September 7, 2012
Apple suspected of building its own noise reduction processor
Audience Inc, a voice quality chip manufacturer for Apple's iPhone, has said that its technology is unlikely to be used in the newest model from Apple, triggering a stock slide. The chips, which filter out background noise, are supplied to Apple manufacturers including Foxconn and Protek. Audience has been supplying chips to Apple since 2008, and the sales have accounted for up to 37 percent of its total revenue.
Audience Chief Executive Peter Santos said that "events of the last week in the normal course of business led us to believe that our technology is not likely to be enabled in Apple's next-generation mobile phone." Royalties are still expected from older iPhone models that use the technology.
Diversification into other computing markets, such as notebooks, is planned to help with the loss of Apple's business. "We now expect these markets to generate in the range of $15 to $20 million of incremental revenue in 2013, partially offsetting the expected loss of royalty revenue from Apple," Santos said. The company stated in a regulatory filing that a reduction in orders from one or more of its major customers such as Apple or Samsung could "significantly damage its financial condition and cash flow."
A previous S-1 filing noted that Audience was receiving royalties from Apple that were less than in previous quarters, after it was thought that the Audience-derived EarSmart technology was embedded in the iPhone 4S A5 processor. Audience noted that Apple had assembled its own noise reduction team, which is the likely cause of the removal of Audience's technology.