Microcontroller, Analog Companies Best Positioned for "Internet of Things" Trend: Microchip (MCHP), Texas Instruments (TXN) and Silicon Labs (SLAB) Investing Heavily into Booming Market

Wall Street Transcript

67 WALL STREET, New York - May 30, 2013 - The Wall Street Transcript has just published its Semiconductors Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Semiconductor Capital Equipment - Cloud Computing, Mobile Device Consumer Demand - Semiconductor Inventory Burnoff - Improvement from Cyclical Bottom - Semiconductor Capital Equipment Spending - New Computing Platform Demand

Companies include: Microchip Technology Inc. (MCHP), Texas Instruments Inc. (TXN), Silicon Laboratories, Inc. (SLAB), Volterra Semiconductor Corpora (VLTR), Linear Technology Corp. (LLTC), Intersil Corp. (ISIL), Monolithic Power Systems Inc. (MPWR), Exar Corp. (EXAR), Hittite Microwave Corporation (HITT), Broadcom Corp. (BRCM) and many more.

In the following excerpt from the Semiconductors Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Are there any companies from your group that stand out as being at the forefront of the "Internet of things?"

Mr. Svanberg: This is a fairly new market, but there are all sorts of examples. You've got the state-of-the-art tractor that has 500 different sensors, and those sensors basically communicate information back to the Internet for all sorts of data analytics. There are all sorts of industrial communications networks where information is moving on the factory floor with secure wireless connectivity as opposed to wireline or cable. So there are a lot of these different types of examples.

I would say companies that are best positioned for "Internet of things" would be either microcontroller companies or analog companies, and the reason why is because that's really what you need in order to develop the semiconductor for "Internet of things." So companies like Microchip (MCHP), Texas Instruments (TXN), Silicon Labs (SLAB), these are companies that have publicly announced that they are investing heavily into the "Internet of things" markets.

TWST: What are the industry-specific metrics you find most meaningful in analyzing semiconductor stocks that investors in the space should also evaluate?

Mr. Svanberg: It's interesting, because if you would've asked me that question 15 years ago, I would've answered growth. So growth, I think, was the one metric that really dictated people or investors' perception of a successful stock or a company.

I think now that the semiconductor industry has matured and moved into sort of a slower growth pace, I would say profitability, and especially cash flow generation, I think, is becoming a more important metric. And keep in mind, the analog sector and analog companies tend to be very profitable, generate a lot of cash and actually pay dividends, and I think that's something that investors are valuing much more now than, let's say, 15 years ago...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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