ON Semiconductor (NASDAQ:ON) is focused on improving optical simulation capabilities to strengthen its position in producing autonomous vehicle sensors. Toward this purpose, the company recently announced that its CMOS image sensors will support NVIDIA (NASDAQ:NVDA) DRIVE Constellation simulation platform with real-time data.
NVIDIA leverages ON Semiconductor’s superior imaging technology and is designed to bolster video adoption within Internet of Things (IoT) products and accelerate OEMs’ ability to offer advanced solutions to the IoT market.
The latest CMOS image sensors have high performance 4.2 µm pixel that facilitates global shutter imaging with Correlated Double Sampling (“CDS”) in a compact pixel size by utilizing ON Semiconductor’s patented in-pixel CDS. It features 1 MP to 12 MP image sensors.
The new high resolution devices bring together tremendous imaging performance with swift output architectures that utilizes all vital parameter in the path from converting photons to digital output (for instance Quantum Efficiency, Noise, Gain, Analog-to-Digital Conversion, Black Level Correction and more).
The new devices are available in monochrome, Bayer (DE:BAYGN) color, and extended near-infrared configurations. Per Ross Jatou, vice president and general manager, Automotive Sensing Division, ON Semiconductor, “Our innovative, scalable image sensor solutions address the stringent and evolving needs of autonomous driving, so to be an integral part of such an important and enabling program that will help accelerate progress to safe, robust driverless vehicles, is really important to us.”
Shares of On Semi have returned 33.3% in the year-to-date period, outperforming the industry’s rally of 22.3%. The latest expansion of its product portfolio will aid the company in sustaining momentum in 2019.
Market Opportunities
The emerging self-driving vehicle market presents significant growth opportunity for sensor providers.
Per a MarketsandMarkets report, “the CMOS image sensor market” is projected to witness a CAGR of 11.8% from 2015 to 2020 (base year: 2014). The market valuation in 2014 was $8.8 billion.
Per a Technavio report, the global autonomous vehicle sensors market is expected to reach 196.07 million units by 2021 at a CAGR of 115%.
Per a ResearchandMarkets report, the global autonomous vehicle sensor market is projected to witness a CAGR of approximately 105% from 2016 to 2023 on account of rising demand of autonomous vehicles.
Per a MarketsandMarkets report, “The semi-autonomous and autonomous vehicles market, in terms of volume, is projected to grow at a CAGR of 21.36% from 2017 to 2022 (base year: 2016) and 68.94% from 2025 to 2030 (base year: 2024) respectively.”
The aforementioned reports strengthen the prospects of investment opportunities in night vision/ low light imaging sensors. We believe the product launch will bode well for the company’s top line.
To Conclude
During the last reported quarter, the automotive (32% of revenues) end-market revenues were approximately $475 million, up 9% year over year.
Further, the company is focused on investing in growth areas such as ADAS and wireless charging in the automotive business to broaden exposure. This will further enhance performance and help it deliver strong results.
The product launches in the automotive end market for next generation automobile designs and the existing product portfolio will increase revenues for the business quarter over quarter.
Zacks Rank and Stocks to Consider
Currently, ON Semiconductorcarries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Cadence Design Systems, Inc (NASDAQ:CDNS) and Symantec Corporation (NASDAQ:SYMC) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cadence and Symantec have long-term earnings growth rates of 12% and 7.9%, respectively.
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