Semtech Corporation (SMTC - Free Report) is exploring all options to expand its capabilities in 5G on the back of its high-performance analog and mixed-signal semiconductors as well as advanced algorithms.
This is evident from the company’s recent announcement of the availability of FiberEdge driver, namely GN1840.
Further, GN1840 is a low power, linear 26GBaud, packaged DML driver, which delivers high bandwidth. It is also best suited to the 5G wireless applications.
Additionally, the latest driver can be used ideally in 50GBASE-LR and 200GBASE-LR4 applications, courtesy of its high bias and modulation current driving abilities.
We believe, all these innovative features are expected to bolster the adoption rate of GN1840, which in turn, will drive its top line.
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 2020. 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 be $5.53 billion in 2020 and 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 reach $132.8 billion in 2020. It is expected to touch $663.9 billion by 2027 at a CAGR of 25.8% between 2019 and 2027.
We believe, the company is expected to gain further traction in the world of 5G from its robust and industry-leading FiberEdge transimpedance amplifiers and laser drivers.
Optical Product Portfolio Boost
The latest move bodes well for the company’s growing endeavors toward expanding its optical product portfolio.
Strengthening optical products offerings will continue to aid 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 100Mbps to over 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 #4 (Sell).
Intel Corporation (INTC - Free Report) , Applied Materials, Inc. (AMAT - Free Report) and Garmin Ltd. (GRMN - Free Report) are some better-ranked stocks in the same industry, all three sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Intel, Applied Materials and GRMN is currently pegged at 7.5%, 9.9% and 7.4%, respectively.
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