Audience, Maker of IPhone Processors, Planning to Raise $75 Million in IPO

Audience Inc., a maker of sound processing chips used in Apple Inc. (AAPL) products, plans to raise as much as $75 million in an initial public offering.

JPMorgan Chase & Co., Credit Suisse Group AG and Deutsche Bank AG are leading the sale, the Mountain View, California- based company said yesterday in a regulatory filing. Audience didn’t say how many shares it will sell or at what price. The stock will trade under the ticker symbol ADNC.

Audience began shipping chips in 2008, attracting Apple, Samsung Electronics Co. (005930), LG Electronics Inc. and HTC Corp. (2498) as customers. It has sold more than 135 million processors, which improve the quality of communication on phones by isolating voice and suppressing noise.

The company, founded in 2000, had a profit of $13.9 million in the first three quarters of 2011, compared with a loss of 362,000 in the year-earlier period. Sales jumped to $79.7 million from $16.1 million.

Apple, through its contract manufacturers Foxconn International Holdings Ltd. and Protek Ltd., accounted for 79 percent of Audience’s sales in the first nine months of 2011, compared with 82 percent the previous year. Samsung accounted for 17 percent last year, up from 7 percent in 2010.

While sales are growing and the company has been profitable for the last two years, it cautioned potential investors that its relationship with Apple may change.

Licensing Change

Rather than supplying chips to Apple, Audience may start licensing its technology to the company. That transition “may have a material and negative effect on our business, financial condition, operating results and cash flows,” Audience said.

Andrew Humber, an Audience spokesman, declined to comment beyond the information in the filing. Steve Dowling, a spokesman for Apple, also declined to comment.

Audience said its per-unit royalty from licensing technology integrated into phones is less than the amount it receives for selling processors. The company has six patents issued and 72 pending patent applications in the U.S., along with 37 pending foreign applications. Beyond mobile devices, Audience’s technology could work in automobile entertainment systems, cameras and televisions.

The biggest investor in Audience is Tallwood Venture Capital, which owns 32.8 percent. New Enterprise Associates owns a 30.1 percent stake, followed by Paul Allen’s Vulcan Capital with 25 percent.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net; Ari Levy in San Francisco at alevy5@bloomberg.net

To contact the editor responsible for this story: Tom Giles at

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