The analysts noted in the report that the average EV uses two to three times the dollar value of semiconductors compared to the traditional internal combustion vehicle.
Maxim Integrated Products Inc. (NASDAQ: MXIM) also supplies some chips to Samsung for the Galaxy line. It designs, develops, manufactures and markets various linear and mixed-signal integrated circuits worldwide. The company also provides a range of high-frequency process technologies and capabilities for use in custom designs. It primarily serves automotive, communications and data center, computing, consumer and industrial markets.
Top analysts feel that Maxim stands poised to benefit with its Power Management and SERDES content as autonomous cars require leading power efficiency and data distribution. Moreover, the company should see a linear benefit with additional content needed for greater levels of autonomous-driving features in future generations of automobiles including EV’s.
Maxim shareholders are paid a solid 3.3% dividend. JPMorgan has set its price objective for the shares at $52. The consensus target price is $47.91, and the stock closed trading Monday at $43.71 a share.
ON Semiconductor Corp. (NASDAQ: ON) is a smaller cap play that aggressive accounts may want to look at. It is a vendor of analog power management, analog signal conditioning, standard logic integrated circuits (ICs) and discrete chips into the automotive, communications, computing, consumer, industrial and medical applications. The company is in the midst of a transformation from a seller of commodity discrete chips into higher value added analog ICs both through organic growth and acquisitions.
The company holds a leadership position in automotive image sensors and could be a very attractive takeover candidate for a larger chip company looking to expand in its presence in automotive via EV and autonomous driving applications.
The JPMorgan price target is posted at $17. The consensus target is higher at $19.24. The shares closed trading Monday at $15.75.
Many expect the EV market to dominate by as early as 2035, and while that is still quite a few years in the future, there is every reason to believe that timeline could speed up, especially in Europe where some mandates are already being set.