Automotive semiconductor companies catering to electric vehicles (EV) and advanced driver assist systems (ADAS) appear poised to outperform over the next three years, according to BofA Securities.
Automotive semiconductors for EVs and ADAS could be among the “growth megatrends” for the next few years and seems to be currently underappreciated, Arya said in the note.
He added that Gartner estimates the EV/ADAS semis market at $6.4 billion and expects it to grow at a compounded annual rate of more than 25%, despite muted growth in auto units.
Quoting Gartner again, the analyst said that growth is expected to be driven by content expansion, from $37 per vehicle in 2019 to $74 by 2022 for EVs and from $66 per vehicle in 2019 to $136 per vehicle by 2022 for ADAS.
Arya said that China could be among the most important regions for EVs, growing at a compounded annual rate of 20% over the next five or ten years.
The BofA analyst said that NXP Semiconductors, being the largest auto semi vendor, would benefit from secular content trends. He added that autos contributed around 48% of total sales and the company’s strength was in EV battery management systems and radar.
Arya said that ON Semiconductor was “highly levered to content gain opportunities in both electric vehicles and image sensors for autonomous vehicles.” He added that autos contributed around 33% of total sales and the company’s strength was in power conversion and image sensors.
Shares of NXP Semiconductors closed almost flat at $132.50, while shares of ON Semiconductor closed down 2.89% to $24.88 on Wednesday.
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