Electric vehicle makers aren’t the only companies benefiting from rising EV penetration rates. A host of chip suppliers are getting a top-line boost, thanks to the semiconductor needs of EV chargers, battery packs and powertrains.
To be sure, none of the chipmakers mentioned below are pure plays on EVs. They each serve a host of non-automotive verticals as well, and in some cases they also get significant revenue from automotive end-markets such as advanced driver-assistance systems (ADAS), infotainment systems and in-vehicle networking.
Regardless, EV sales are taking off -- research firm IHS Markit forecasts they’ll grow nearly 5-fold from 2.5 million vehicles sold in 2020 to over 12.2 million in 2025, while consulting giant Deloitte forecasts they’ll grow more than 12-fold from 2020 to 2030. And as a result, a slew of major chip suppliers are poised to see strong double-digit annual growth (and perhaps in some cases, triple-digit growth) in their EV-related sales over the next several years.
Here are a few top publicly-traded names within the group.
1. Cree (Wolfspeed)
Cree (CREE) - Get Cree, Inc. Report, which recently sold its age-old LED chip business and is set to change its name to Wolfspeed, is by far the world’s biggest maker of silicon carbide (SiC) substrates and wafers. It’s also a major supplier of SiC power semiconductors.
Relative to power chips made with standard silicon, SiC chips can provide higher power densities, faster power switching speeds and lower power switching losses. For EVs, that can spell faster charging times, improved range and/or less battery weight.
Cree’s own EV-related SiC offerings include AC/DC and DC/DC converter chips for EV chargers, as well as high-power inverters that convert a battery’s DC power into AC power that can be used by a car’s powertrain. The company also supplies SiC wafers to chipmakers such as Infineon (IFNNY) , STMicroelectronics and ON Semiconductor, who use them to make their own SiC power chips.
Wolfspeed has forecast it will generate $1.5 billion in revenue in 2024, with $900 million coming from materials sales and $600 million from chip sales. EV applications are expected to account for much of the total.
2. Analog Devices
Analog Devices (ADI) - Get Analog Devices, Inc. Report is a major supplier of battery management systems (BMS) for EVs -- they consist of a slew of chips that collectively monitor and manage an EV’s battery pack, with the goals of improving EV range and battery reliability. And the company’s pending acquisition of rival Maxim Integrated (MXIM) - Get Maxim Integrated Products, Inc. (MXIM) Report stands to further increase the size of its BMS business.
ADI claims that more than half of the top-10 EV manufacturers use its BMS's. Last September, the company unveiled a wireless BMS -- compared with traditional wired BMS, it lowers battery weight/volume and improves design flexibility -- while disclosing it will be used by General Motors’ (GM) - Get General Motors Company (GM) Report Ultium battery platform. Altogether, ADI expects four or five 5 auto OEMs will adopt its wireless BMS by the end of 2023.
In addition to BMS’s, ADI sells power semiconductors for on-board EV chargers, as well as products used in EV battery manufacturing and testing. The company has forecast its EV-related business will post a 30%-plus compound annual growth rate (CAGR) over the next five years.
3. NXP Semiconductors
NXP Semiconductors (NXPI) - Get NXP Semiconductors NV Report is ADI’s largest rival in the BMS market. Last September, the company forecast that its BMS business, which was on a $50-million annual revenue run rate at the time, would post a roughly 60% CAGR through 2023. Volkswagen uses NXP’s BMS’s, and the company has also reported landing design wins with Chinese EV makers.
Along with BMS’s, NXP’s 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.
STMicroelectronics (STM) - Get STMicroelectronics NV ADR RegS Report sells an extensive array of power semiconductors for EV chargers and powertrains. Its lineup includes both silicon and SiC power chips for EVs and hybrids. Tesla is known to use SiC inverters from STMicro within the Model 3’s powertrain.
STMicro is also a player in the BMS market. To make its SiC power chips, the company relies on both SiC wafers purchased from Cree/Wolfspeed and (following its 2019 purchase of wafer manufacturer Norstel AB) internally-manufactured wafers.
5. ON Semiconductor
ON Semiconductor ON, which obtained 35% of its Q1 revenue from the automotive market, also sells many different power semiconductors for EVs.
The company sells a number of SiC and silicon chips for EV charging applications, as well as several different silicon and SiC traction inverters. Other EV-related offerings include chips for auxiliary power supplies, and ones for DC/DC converters used by plug-in hybrids.
Eric Jhonsa covers technology stocks for Real Money, TheStreet’s premium site. Click here to learn more and get great columns, commentary and trade ideas from Jim Cramer, Helene Meisler, Stephen Guilfoyle and others.