Semiconductor company Maxim Integrated Products (NASDAQ:MXIM) has set the Street on fire this year. The stock has gained around 23% so far, comprehensively outpacing the broader market. Looking ahead, Maxim looks set to get better as it supplies chips to Apple (NASDAQ:AAPL), and it has been rumored that the chip maker is landing more dollar content at Cupertino, hurting Cirrus Logic (NASDAQ:CRUS) in the process. Maxim is undertaking a number of moves to grow the business, and it won't come as a surprise if it soars to new highs in the future.
Impressive moves to tap the end markets
Maxim is planning and acting to expand its exposure in its mobility business by taking several actions. It is expanding its technology offerings for mobile devices, which include power management, optical sensors, MEMS, audio amplifier, and touch products, while it is also shipping next generation audio amplifiers.
Maxim is tapping the mid-range smartphone market, especially in China, with its cutting-edge systems expertise that it develops for high-end smartphones. Within mobility, sensors are also a growing market. The company's high integration power system-on-a-chip is gaining strong traction, so Maxim is designing more customized versions of this product. Expanding beyond smartphones, Maxim is growing its business in games and tablets, e-readers, and wearable devices. Wearables, particularly, are doing well with its highly-integrated small form factor and low power solutions.
Maxim is also addressing the medical field with its highly integrated medical products, addressing the growing need for less costly low power and biomedical monitoring devices in clinics, as well as for commercial use at home. Some achievements in this segment include a high-integration portable ultra sound transceiver, and a medical heart rate monitoring device.
Maxim is also seeing strong traction in the automotive business, which was up 25% from the year-ago period in the last quarter and has been growing for five consecutive quarters. This growth has been derived mainly from infotainment as the mobility user experience is moving toward the automotive market.
The company also expects additional growth in the advanced driver assistance safety systems segment, and in hybrid and electric vehicle battery management. Maxim recently announced that its lithium-ion battery monitor is being used by Nissan (OTCPK:NSANY) for the Nissan Pathfinder Hybrid, a sport utility vehicle. This monitor provides self-diagnostics and daisy-chained data communications that help in handling the high-voltage requirements of the automotive industry.
This highly-integrated solution enables a smaller, lighter weight, and high-performance Li+ battery system in the hybrid. The Li+ battery system is supplied by Hitachi Automotive Systems that developed the system and incorporated Maxim's integrated chip. With this configuration, Nissan's Pathfinder Hybrid attains greater driving range than competitive systems, and improves the overall safety of the battery system.
Maxim expects its revenue to touch a high in the computing market. The company is doing well with its integration of Volterra, which has attracted customers with its high density, efficient power management solutions in the communications, data center, enterprise server, and storage markets.
The company is highly-focused on its ability to integrate low power, secure microcontrollers, with highly accurate analog measurement, and expertise in developing compact, highly efficient power management solutions. All in all, it delivers highly integrated solutions, which enable broader coverage, increased capacity, and lower cost of ownership within the networks and data centers of the future.
Destroying Cirrus, winning Apple
Last year, Cirrus Logic lost its audio amplifier spot in the iPad Air to Maxim, and history is about to repeat itself. Both Pacific Crest and Rosenblatt Securities recently claimed that Cirrus has lost its audio amplifier business in the iPhone 6 to Maxim. Pacific Crest believes Maxim's win is a direct outcome of better dynamic power performance, and Cirrus Logic's 2016 EPS can witness a reduction of $0.20-$0.25.
Pacific Crest analyst John Vinh said,
"We believe that Maxim has won multiple audio amplifier sockets on Apple's upcoming new products. Maxim's win is primarily due to better dynamic power performance."
Maxim's rumored design wins with Apple's upcoming iPhone 6 and iWatch could drive an estimated $73 million to $329 million of additional sales. The audio chipmaker Cirrus Logic lost the battle to Maxim Integrated Products on some components in next-generation Apple devices.
Maxim's business is diversified, but the good thing is that the company is on track to profit from several different industry trends. Be it smartphones, cars, or data centers, Maxim looks well-positioned to tap all. So, investors should definitely consider an investment in Maxim as it can move up higher.
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