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Global sales of electric passenger vehicles are projected to exceed 10m this year, about 4m above 2021 levels. EV makers are not the only companies benefiting from rising EV sales. Chip suppliers are also beneficiaries, thanks to the semiconductor needs of EV chargers, battery packs and powertrains.
Analog Devices (ADI) is a world leader in the design and manufacture of a broad portfolio of high performance analog, mixed-signal, and digital signal processing (DSP) integrated circuits (ICs). The company lays claim to the EV industry’s most accurate battery management system (BMS), allowing EVs to have longer battery lives. The company recently completed the acquisition of Maxim Integrated, a leader in battery sensors and keyless technologies.
NXPI Semiconductors (NXPI) is ADI’s largest rival in the BMS market. Its other EV-related products include microcontrollers (MCUs), transceivers and other chips used within inverter control systems that manage the flow of power to an EV’s traction motors. The automotive segment accounted for 44% of NXPI’s revenues in 2020.
Qualcomm (QCOM) is a leading supplier of radiofrequency chips. Qualcomm is moving into EV chips to reduce its reliance on its handset chip business. In Oct, the company announced it was acquiring auto tech company Veoneer. Qualcomm intends to integrate Veoneer’s computer vision and driver assistance systems with its own to provide a compelling unified solution to automakers.
At the strike level of 80% of current prices, the underlying stocks have an implied upside to consensus target price of at least 52%.