This Chipmaker Is a Smart Bet on Electric Vehicles and Industrial Technology
The semiconductor industry is pivoting to address new growth trends: automobiles and industrial equipment. After two decades of focus on smartphones and cloud computing, all the work that's gone into advancing mobile technology for relatively safe applications (an errant smartphone update won't hurt anyone much) is now being applied to more mission-critical operations. After all, mobile software and supporting chips have to work with a high degree of certainty before being put on the road where they could seriously hurt people.
Enter ON Semi (NASDAQ: ON), once a commoditized integrated device manufacturer (IDM) company that was often overlooked in favor of bigger names like Texas Instruments and NXP Semiconductors. ON has done a great job positioning itself the last few years as a top option in the chip space for automotive and industrial technology. However, with shares already up over 240% in the last five-year stretch, is it worth buying right now?
For a number of years, ON has been preparing its lineup of power module and power management, sensor, and motor control chips for the coming explosion in industrial semiconductor adoption. The chip design and manufacturing industry has to plan for customer orders many years in advance. To accommodate more demand, multibillion-dollar chip manufacturing facilities (called fabs) need to be planned and built. Thus, IDMs like ON have a high level of visibility into future demand trends and can plan to profit accordingly.
Source Fool.com
