Market Overview

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.

NXP Semiconductors NV (NASDAQ: NXPI) is poised to take the lead through its pending acquisition of Freescale Semiconductor Ltd. (NYSE: FSL).

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.

Latest Ratings for ADI

Mar 2019BernsteinDowngradesOutperformMarket Perform
Feb 2019Bank of AmericaUpgradesNeutralBuy
Jan 2019RBC CapitalDowngradesOutperformSector Perform

View More Analyst Ratings for ADI
View the Latest Analyst Ratings

Posted-In: Oppenheimer Richard SchaferAnalyst Color Analyst Ratings


Related Articles (ADI + FSL)

View Comments and Join the Discussion!

Latest Ratings

PEPMorgan StanleyReiterates137.0
AZRXH.C. WainwrightMaintains7.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You
for registering for Benzinga’s newsletters and alerts.
• The Daily Analysts Ratings email will be received daily between 7am and 10am.
• The Market in 5 Minutes email will be received daily between 7am and 8am.
• The Fintech Focus email will be received every Friday between 2pm and 5pm.

Fundrise CEO Ben Miller On 'Why Pre-Funding Matters'

Sterne Agee's Reasons To Love Buffalo Wild Wings