The auto megatrends, such as the electrification of vehicles and ADAS (Advanced Driver Assistance Systems), provide a solid foundation for growth for onsemi (NASDAQ:ON), a semiconductor company focusing on automotive and industrial end-markets. To further strengthen its competitive positioning in the auto market, onsemi announced a long-term supply agreement with BMW (XETRA:BMW).
Per the agreement, onsemi will equip BMW’s future EVs (Electric Vehicles) with its EliteSiC technology, providing a competitive advantage to the German car maker. As EVs witness increased adoption, the maximum range has become a key differentiator for companies. Notably, onsemi’s EliteSIC silicon carbide modules improve efficiency and lower the weight of the traction inverters, thus extending the range of EVs and enhancing performance.
Along with BMW, Jaguar Land Rover has signed a seven-year supply agreement with onsemi to adopt its silicon carbide modules for their next-generation platforms. In addition, Hyundai Motor Group selected onsemi’s EliteSiC silicon carbide power modules for its high-performance EVs.
It’s worth highlighting that the automotive market, especially EVs, has emerged as one of the bright spots for chip designers and makers, who are struggling due to lower demand in other end markets.
In Q4, onsemi delivered automotive revenue of $989 million, up 47% year-over-year. Moreover, auto revenues now account for 47% of onsemi’s total revenue. Looking ahead, onsemi sees strong demand from the automotive end market, led by the ongoing megatrends.
While onsemi will likely benefit from the automotive end market demand, let’s see what analysts recommend for the stock.
Is onsemi a Good Stock to Buy?
onsemi stock has a Moderate Buy consensus rating on TipRanks, reflecting 19 Buy and eight Hold recommendations. Further, the analysts’ average price target of $91.65 implies 18.40% upside potential.
