Semtech (SMTC) Boosts IoT System Offerings With Latest Deal
Semtech Corporation SMTC joined forces with Oxit, an Internet of Things (IoT) services company, to boost customers' connectivity choices with multiple LoRa networks.
With this collaboration, Semtech aims to help device manufacturers build a single device that can connect to both Amazon’s AMZN AWS IoT Core for Amazon Sidewalk and AWS IoT Core for LoRaWAN networks, with the help of OxTech Multi-Connectivity Module.
This, in turn, enables customers using both public and private networks to simplify integration and select the most suitable network for coverage and enhanced connectivity, without managing infrastructure.
Moreover, the module allows users to create their own applications directly, thereby simplifying deployment and expediting the time to market.
Additionally, the latest move provides a single IoT cloud endpoint, AWS IoT Core, on one device.
We note that the latest move has added strength to Semtech’s IoT System offerings, which contribute the majority to the total revenues of Semtech.
For first-quarter fiscal 2024, IoT System (57% of net sales) sales were $134.6 million, exhibiting year-over-year growth of 166.9%.
Semtech Corporation Price and Consensus
Semtech Corporation price-consensus-chart | Semtech Corporation Quote
Growth Prospects
The latest move reveals the company’s intention to strengthen its global footprint in the booming IoT devices market.
Per a Mordor Intelligence report, the IoT devices market size is expected to reach $336.64 billion by 2028, witnessing a CAGR of 23.25% between 2023 and 2028.
A Fortune Business Insights report suggests that the global IoT market is expected to hit $662.21 billion in 2023 and reach $3.35 trillion by 2030, registering a CAGR of 26.1% during the forecast period of 2023-2030.
Ongoing Collaborations and Expanding Portfolio
Notably, the latest move bodes well for Semtech’s growing efforts toward expanding its overall portfolio.
Moreover, we believe that ongoing collaborations to reach a wider customer base and the latest additions to its overall product portfolio will help the company gain momentum with new customers and maintain existing ones.
Recently, Semtech partnered with Unabiz, integrating the LoRaWAN and Sigfox 0G technologies. This collaboration allows customers to create global IoT solutions for asset management, particularly in the supply chain and logistics industries.
Further, Semtech has collaborated with Sustainable Hrvest Sdn Bhd to provide Malaysian farmers with LoRa-enabled sensors, giving them real-time visibility of their farm health data. This helps farmers to simplify their lives and improve their bottom line throughout the growth cycle.
Additionally, Semtech introduced PerSe Connect SX9376, a new integrated circuit designed for 5G mobile devices, enhancing RF performance, improving connectivity and ensuring global SAR compliance.
Also, Semtech launched XCVR Development Board and Reference Design, which integrates with the LoRa Sub-GHz Radio Transceiver. This product simplifies the design process and reduces time-to-market for building management, agriculture, supply chain, logistics and industrial control.
We note that the abovementioned endeavors will likely aid its overall financial performance. This, in turn, is expected to instill investor optimism in the stock.
For second-quarter fiscal 2024, management expects net sales to be $233-$243 million. The Zacks Consensus Estimate for the same is pegged at $237.06 million, suggesting year-over-year growth of 13.3%.
However, macroeconomic headwinds, including demand softness, inflationary pressure and supply-chain constraints remain major concerns.
Semtech’s shares have declined 11% in the year-to-date period compared with the industry’s growth of 23.1%.
Zacks Rank & Stocks to Consider
Currently, Semtech carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Applied Materials AMAT and Salesforce CRM. While Applied Materials sports a Zacks Rank #1 (Strong Buy), Salesforce carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Applied Materials shares have gained 55% in the year-to-date period. AMAT’s long-term earnings growth rate is currently projected at 6.10%.
Salesforce shares have gained 62.2% in the year-to-date period. CRM’s long-term earnings growth rate is currently projected at 19.25%.
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