Semtech Corporation
SMTC
has been exploring all options to expand its capabilities in 5G on the back of high-performance analog and mixed-signal semiconductors as well as advanced algorithms.
This is evident from the company’s recent announcement of expansion of the Tri-Edge CDR portfolio, namely GN2256, with a new IC solution.
GN2256 is a low power, ultra-low latency and uses low cost 25 gigabit per second (Gbps) bandwidth optics to operate at 50Gbps PAM4. The new IC solution enables 50Gbps PAM4 Fixed-WDM (Wavelength Division Multiplexing), Tunable WDM and Silicon Photonics optical modules.
Markedly, the approach toward expansion of 5G wireless infrastructure bandwidth differs based on geographic region. Different types of optical modules are required for varied regions. The company’s Tri-Edge 5G platform addresses optical modules and is suitable for all geographic regions.
We believe these innovative features are expected to bolster the adoption rate of GN2256, which in turn, will drive its top line.
Semtech Corporation Price and Consensus
Semtech Corporation price-consensus-chart
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Semtech Corporation Quote
5G Potential
Semtech is well poised to capitalize on the growth opportunities pertaining to the increasing deployment of 5G across the world.
We note that 5G is set to proliferate in 2021. The fifth-generation mobile network is touted to revolutionize the way in which we interact with technology, facilitating faster download speeds and seamless transfer of data.
The global 5G technology market is estimated to reach $667.90 billion by 2026, witnessing a CAGR of 122.3% during the 2021-2026 period, per an Allied Market Research report.
According to Facts & Factors report, the global market for 5G services and applications is expected to touch $663.9 billion by 2027 at a CAGR of 25.8% between 2019 and 2027.
We believe that the company is expected to gain further traction in the world of 5G from the new IC solution of the Tri-Edge CDR portfolio.
Optical Product Portfolio Boost
The latest move bodes well for its growing endeavors toward expansion of the optical product portfolio.
Strengthening optical products offerings will continue to boost Semtech’s footprint in the promising markets of Enterprise Computing and Communications.
Notably, the company’s optical product portfolio comprises optical transceiver IC products ranging from 100 megabits per second to more than 100Gbps, which support key industry standards such as Fibre Channel, InfiniBand, Ethernet, Common Public Radio Interface and Passive Optical Network to name a few.
However, Semtech is persistently affected by mounting competition in the semiconductor space including sluggish demand in China. The resultant pricing pressure could dampen the company’s margins and profitability.
Zacks Rank & Stocks to Consider
Currently, Semtech carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include
Analog Devices, Inc.
ADI
,
NXP Semiconductors N.V.
NXPI
and
ON Semiconductor Corporation
ON
, each carrying a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
Long-term earnings growth for Analog Devices, NXP Semiconductors, and ON Semiconductor is currently projected at 12.3%, 10%, and 41.5%, respectively.
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