Why A Shift To Smartcars Is A Long-Term Tailwind For Chip Makers
Automotive semiconductor suppliers will outgrow vehicle unit sales by at least a factor of two during the coming decade, an analyst said Thursday.
"We are in the very early stages" of a switch to so-called smartcars, Oppenheimer's Richard Schafer said.
Best positioned for the transition according to Schafer: Analog Devices, Inc. (NASDAQ: ADI), Linear Technology Corporation (NASDAQ: LLTC), Monolithic Power Systems, Inc. (NASDAQ: MPWR) and Texas Industries Incorporated (NASDAQ: TXN).
More than 30 companies play in the automotive market, but a half-dozen chip makers together hold about a 50 percent share.
The $11.8 billion deal will give NXP a 13 percent share of the automotive chip market, based on 2014 results.
NXP will be a "key beneficiary" of growth in automotive semiconductors, and is "among our favorite ways to capitalize on this long-tailed trend," Schafer said.
Automotive-related sales represented about 9 percent of the $340 billion semiconductor market last year.
Japan-based Renesas Electronics Corporation (OTC: RNECY) has an 11 percent share, followed by Infineon Technologies AG (ADR) (OTC: IFNNY)'s 9 percent and STMicroelectronics NV (ADR) (NYSE: STM) at 7 percent.
Others with significant players include Bosch Ltd. and Texas Instruments, with OmniVision Technologies, Inc. (NASDAQ: OVTI) and Mobileye NV (NYSE: MBLY) important niche players in image sensor supply.
Analog Devices has a 2 percent total market share, but its automotive business is growing at about 20 percent annually over the past five years and equals about 20 percent of its revenue, according to Schafer.
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