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Diversified End-Markets Make This Chipmaker a Solid Investment

August 06, 2014 | About:
rusticnomad

rusticnomad

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Maxim Integrated (MXIM) didn't do very well last quarter as its revenue declined. This decline was anticipated by management, as its consumer business was facing seasonal weakness. However, the gains from the initial ramp of a new smartphone at its largest customer arrested the decline.

Maxim gets most of its revenue from its computing business. However, due to weakness in the U.S. OEMs for its server and notebook business, this business didn't do too well. However, the gains in the automotive segment signal that the company has solid room for growth in its core industrial business in the future.

Growth drivers

Maxim’s growing communication business cannot be neglected, either, which is benefiting from the strength in base stations due to China’s 4G LTE deployments and cable infrastructure products. Maxim saw strength in bookings, which created a massive backlog in the quarter. Based on these facts, the company is anticipating revenue of $635 million to $665 million in the ongoing quarter.

It is counting on the analog market, where it seems to be in a good position to take advantage of the present trends. Maxim, with its unique position in the industry, has built a strong portfolio of products and capabilities. With such an active portfolio, the company expects to provide a best-in-class system level integration to customers.

The company is noticing the positive impact of these efforts in markets such as automotive, industrial, communication and data center. In addition, its mobility segment is also running along nicely. With increasing content in smartphones, tablets and e-readers, this segment is expected to gain steam in the coming days.

Maxim sees solid opportunities in the automotive market as well due to growing demand for processors and sensors. Further, with several design wins in the medical segment, the company has another growth outlet.

Customer ramps will drive performance

Moving ahead, Maxim is expecting growth in revenue in the June quarter because of opportunities in the consumer market. The company lined up shipments for its major customers for their latest generation smartphones. Moreover, Maxim is focusing on various other initiatives, on the back of which, it is aiming for a solid financial performance in the future.

As the mobile market is gaining steam, Maxim is expanding its technology offering for mobile devices. In this regard, Maxim is entering the market with a strong portfolio, including power management, optical sensors, MEMS, audio amplifiers, and audio products. The company sees growth opportunities in audio amplifiers. Besides, Maxim also expects growth in the sensor market, which can be a key growth driver.

China in focus

The prime focus of Maxim remains on China and particularly on the mid-range smartphone market as a majority of the customers are interested in low- and mid-range products in China. Having achieved new power SoC wins, the company is well positioned to leverage its systems expertise that it employs in high-end smartphones for mid-range phones, as these phones are richer in their feature set.

Also, Maxim is seeking to expand its business to other areas. Beyond smartphones, it is trying its hand in games, tablets, e-readers, and wearables. All these efforts by the company are a part of its diversification strategy.

Conclusion

Maxim is well-positioned to deliver growth across several markets. The company's innovations and illustrious customers put it in a strong position to achieve growth in the long run. So, investors should consider Maxim Integrated for their portfolio as it can get better in the long run.


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