Dirac Improves Sound Quality for Major Hardware Brands in China

Increasing tensions between the United States and China are leading to a separation in global technology, as both nations develop independent tech infrastructures. While this situation may be hindering international investment and business growth between these two major powers, other nations – particularly those in Southeast Asia and Europe – are still discovering beneficial opportunities.

Dirac, a Swedish company founded 15 years ago, exemplifies this trend. The firm licenses its sound optimization technology to a diverse range of industries, including mobile devices, home entertainment systems, augmented/virtual reality, automotive, and more, where high-quality audio is essential. According to its founder and chief executive, Mathias Johansson, the current geopolitical climate has not had any negative effects on the company, as he shared in a discussion with TechCrunch.

Located in Uppsala, Sweden, Dirac has established strong connections with China, providing its solutions to leading smartphone manufacturers such as Huawei, Oppo, Xiaomi, and Transsion, which focuses on the African market. Currently, over half of the company’s revenue originates from China.

The company’s focus on China is partly rooted in the founder’s initial interest in the country. During his PhD studies two decades ago, Johansson was impressed by the “swift progress” occurring within China’s technology sector upon his first visit.

“The audio sector was among the first to move manufacturing to China, but it subsequently expanded to include development and design. We recognized that this market was absolutely vital for the entire consumer electronics landscape,” Johansson explained.

Since then, the entrepreneur has frequently traveled throughout Asia, especially to Japan and China, where the electronics industry was thriving. In 2010, he hired Tony Ye as Dirac’s first China-based manager, who had previously worked for the Swedish software company IAR Systems in Shanghai. While the groundbreaking iPhone 4 was gaining global attention at the time, Johansson and his team were also optimistic about the potential of the Chinese market.

“We anticipated that China would eventually become a leader in the smartphone industry. We believed that, with Android and Arm processors, it would represent a distinct market. Therefore, we concentrated our efforts there, and we felt that [Chinese companies] would be more receptive to exploring new ideas, much like we were pioneers ourselves,” the founder stated.

“That prediction proved to be accurate.”

Although the Chinese government is promoting technological self-sufficiency, its initiatives are primarily focused on strategic areas like 5G and artificial intelligence. In more specialized and less politically sensitive fields, there continues to be a demand for imported technologies. These solutions are often highly advanced, the result of extensive research and development, but are too specific for large corporations to justify the investment of resources. This applies to certain video enhancement technologies (as highlighted in a TechCrunch feature on Imint, another Uppsala-based company) and, in Dirac’s case, sophisticated sound optimization.

Johansson’s research into the audio technology that underpins Dirac began approximately 20 years ago during his university studies, creating a significant barrier to entry for competitors, according to the founder. Dirac corrects audio in a manner similar to how eyeglasses correct vision. The team initially transmits a test signal through the speaker system, records it using a microphone, and generates a digital representation of the audio, measuring its acoustic characteristics. It then creates an exact “mirror image” of the distortions produced by the system, sending pre-distorted audio back to the speakers, ultimately delivering a distortion-free sound experience to the user.

The research and development process at Dirac is lengthy, but collaboration with Chinese companies has encouraged the Swedish firm to innovate.

“It has pushed us to develop new, more efficient methods for achieving the same results and to maintain a pace of innovation that stays ahead of the competition, whether it’s from domestic Chinese companies, the U.S., or elsewhere,” the founder acknowledged.

Dirac generates revenue by licensing its intellectual property to clients and collecting royalty fees for each device shipped. It also employs a B2B2C business model, allowing end-users to upgrade the sound system of a device – such as a speaker – by paying a fee, which is then shared between Dirac and the device manufacturer. Recently, the company secured a significant partnership with BYD, a Chinese electric vehicle manufacturer, a deal considered a crucial step in expanding Dirac’s presence in the automotive industry.

“Traditional automotive manufacturers are facing challenges, and the entire ecosystem is undergoing transformation,” Johansson noted. “With software upgrades, cars are evolving into something quite different. They are becoming increasingly similar to mobile phones and more software-driven. The entertainment aspect, and particularly the audio experience in cars, is becoming a paramount feature, as the level of noise is so low, the vehicles are so quiet, and many are potentially self-driving. The audio quality you will experience in cars will be exceptional in the coming years.”