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This Diversified Semiconductor Stock Is a Sound Investment

July 28, 2014 | About:

Fairchild Semiconductor (NASDAQ:FCS) wasn't fit as a fiddle at the close of 2013. Feeble orders from Samsung (SSNLF), one of its biggest customers, kept Fairchild down, and it was not able to take advantage of its supplier relationship with Apple (AAPL).

A solid comeback

On the other hand, the story is diverse this year. Fairchild has outperformed the NASDAQ Composite list with gains of more than 12% so far in 2014. The organization's request book has enhanced significantly, it has diminished its losses, and prospects at last market seem strong. With everything taken into account, Fairchild is reporting improvements on several fronts, which is the reason it could be a decent turnaround play.

The great thing is that Fairchild investors can anticipate that such improvements will proceed. The organization recorded orders worth $375 million in the previous quarter, outpacing aggregate revenue. Truth be told, the overabundance increased 20% on a sequential basis, fundamentally determined by the mobile business. Fairchild recorded various design wins in Asia, mostly in mid-range devices, for its battery charging and force administration solutions.

Solid growth expected

Presently, Samsung happens to be Fairchild's largest customer as per the latest 10-K recording. On the off chance that Samsung is embracing Fairchild's new power administration solution, it isn't surprising to see why the organization is seeing a windfall in orders. Samsung expects to sell an aggregate of 330 million smartphones this year, up 14% from last year. Out of these, just 35% are required to be top of the line devices, while the rest will be mid-reach phones.

As Fairchild's focus is fundamentally on the mid-range smartphone business, Samsung's reception of its latest engineering will be a tailwind going ahead.

Apple is an alternate potential catalyst that Fairchild investors are anticipating. Mac uses Fairchild's chips in its ipad line-up. Last year, the ipad Mini Retina conveyed several Fairchild chips inside it, alongside a spot in the ipad Air. In spite of the fact that ipad sales hit a divider last quarter, an item refresh later this year will help Apple arrest its piece of the pie decline.

As indicated by analyst Ming Chi Kuo of KGI Securities, Apple will prepare its second-gen ipad Air with Touch ID, an A8 processor, and an enhanced Polaroid with a 8-megapixel resolution. The new retina ipad Mini will also get similar upgrades. Also, the existing ipad Mini with retina display is relied upon to get a value cut, and this should spur sales of the gadget. All things considered, Apple's ipad refreshes should inhale new life into the ipad line-up, which will be uplifting news for Fairchild.

Separated from mobile devices, Fairchild is discovering footing in the auto advertise as well. Auto sales were up 14% on a sequential basis in the first quarter, determined by interest for powertrain solutions such as ignition force administration and electronic force steering controllers. Fairchild is concocting an assortment of new powertrain solutions to address this business.

It left the first quarter with strong request development in auto, demonstrating strong energy. Thus, strength in automobile sales will keep driving interest for Fairchild's solutions.


Fairchild's turnaround looks set to proceed. The organization's results and request book paint a positive picture about the business, while the positive trends at last markets should help it sustain the force going ahead. So, it would appear that Fairchild has more upside in store.

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