Power Companies Close Out 2020 with Growth and New OpportunitiesMarch 10, 2021 by Shannon Cuthrell
A look into the latest quarterly and full-year earnings results from the power electronics companies.
According to a recent report from Gartner, worldwide semiconductor revenue hit $449.8 billion in 2020, up 7.3% following a 12% decline over 2019. Though the decline of enterprise and consumer spending posed a hit to automotive, industrial and consumer markets, the rise of work-from-home and remote learning raised new opportunities for power-focused companies.
This trend is consistent with recent quarterly and year-end earnings results from the industry’s leading names. More in the following analysis:
Dallas-based semiconductor and IC manufacturer Texas Instruments reported $4.08 billion in net revenue for the fourth quarter of 2020, a 7% increase from last quarter and a 22% increase from Q4 2019. That growth is driven by rising demand in automotive, personal electronics and industrial products.
Revenue is up across TI’s core analog and embedded processing segments, increasing 9% and 11% from last quarter and 25% and 14% from Q4 2019, respectively. In the automotive end-market, revenue increased 19% from last quarter and 25% from Q4 2019, marking a market rebound consistent with industry trends. Meanwhile, TI’s industrial segment grew 7% from last quarter and 16% from last year, while personal electronics grew 11% sequentially and 39% from 2019.
However, revenue decreased in the communications equipment (down 28% from Q3 and 8% from 2019) and enterprise systems end-markets (down 2% from Q3 and 13% from 2019).
According to an investor presentation from last month, 37% of 2020 revenue was sourced from TI’s industrial segment, which targets 13 sectors and supports tens of thousands of customers. This segment is followed by personal electronics (27% of 2020 revenue), automotive (20%), communications equipment (8%) and enterprise systems (6%).
“We see good opportunities in all of our markets, but we place additional strategic emphasis on industrial and automotive,” Dave Pahl, TI’s head of investor relations, stated in the earnings call. “Our industrial and automotive customers are increasingly turning to analog and embedded technology to make their end products smarter, safer, more connected and more efficient. These trends have resulted and will continue to result in growing chip content per application, which will drive faster growth compared to our other markets.”
For the first quarter of 2021, TI expects revenue to range between $3.79 billion to $4.11 billion.
Switzerland-based semiconductor manufacturer STMicroelectronics is a leading industry name with more than 100,000 customers, including the likes of Apple, Samsung, Huawei, HP, Nintendo and Tesla. Its portfolio includes automotive MCUs, ADAS safety solutions, discrete and power transistors, MEMS sensors and microactuators, proximity and ranging sensors, analog, industrial and power conversion ICs, microcontrollers, memory devices, and more products serving the automotive, industrial, personal electronics, communications and equipment markets.
A slide from STMicroelectronics’ Q4 and fiscal year 2020 financial results presentation to investors (page 11).
STMicroelectronics generated $10.22 billion in net revenues in 2020, up 6.9% from 2019. Its analog, MEMS and sensors group claimed 38% of 2020 revenue, followed by the automotive and discrete group at 32% and the microcontrollers and digital ICs group at 30%.
In the fourth quarter of 2020, the company recorded $3.24 billion in net revenues, up 21.3% from last quarter, led by personal electronics and increased demand in automotive products and microcontrollers.
In an earnings call on Jan. 28, STMicroelectronics President and CEO Jean-Marc Chery stated that smart mobility, power and energy, IoT and 5G trends accelerated in 2020, guiding demand for the company’s products.
“We are also facing an unprecedented market situation,” Chery added. “Semiconductor demand is increasing across the entire industry, driven by car production volumes and replenishment of inventories across the automotive supply chain, very lean inventory levels at distributors, and stay-at-home effects boosting demand of personal electronics and communications products.”
Looking ahead to the first quarter of 2021, STMicroelectronics anticipates net revenues of $2.93 billion, a 31.2% year-over-year increase. To meet market demand, the company plans to invest between $1.8 billion and $2 billion towards capital expenditures in 2021.
Arizona-based ON Semiconductor manufactures semiconductors and power management devices for automotive, communications, computing, consumer and industrial (including medical, military and aerospace) applications.
The company reported $1.44 billion in revenue in the fourth quarter of 2020, representing a 10% jump from last quarter’s $1.3 billion, and up 3% year-over-year from $1.4 billion in Q4 2019.
Total 2020 revenue was $5.2 billion, down 4.8% from $5.5 billion in 2019.
In the announcement, ON Semiconductor President and CEO Hassane El-Khoury said the fourth quarter brought broad improvements in the global macroeconomic environment, lean inventories, and a steep recovery in the automotive end-market, which claims about a third of the company’s end-market revenues.
“The company has outstanding assets, targeting the fastest growing semiconductor end-markets with solid margin potential,” El-Khoury added. “As we reposition the company, we aim to realign capital allocation and investments in the business with our strategic intent of driving strong revenue growth, structural margin expansion, and free cash flow generation.”
Compared to the fourth quarter of 2019, end-market revenue increased in several areas over Q4 2020, recording gains in computing (+22%), automotive (+6%) and industrial/medical/military/aerospace (+2%) segments. Simultaneously, ON Semiconductor saw declining revenues in the communications and consumer segments, down 7% and 2%, respectively, compared to Q4 2019.
In 2021, ON Semiconductor expects revenue to range from $1.41 billion to $1.51 billion, with a gross margin of 34.1% to 36.1%.
San Jose, California-based Power Integrations produces electronic components used in high-voltage power conversion applications. Its product portfolio includes an extensive lineup of AC-DC converters, LED drivers, gate drivers and motor drivers for industrial and consumer applications. The firm has a global network of design centers and labs.
Fourth-quarter revenues reached $150.7 million, exceeding the company’s expectations. This figure is 24% higher than last quarter’s $121 million but 32% lower than the fourth quarter of 2019.
Overall, Power Integrations’ revenue increased 16% in 2020 to $488.3 million. A presentation to investors shows a relatively balanced portfolio: In 2020, 33% of total revenue was sourced from the consumer segment, 30% from industrial products, 30% from communications and 7% from computer products.
A slide from Power Integrations’ investor presentation (page 25).
In an earnings call on Feb. 2, Power Integrations CEO and President Balu Balakrishnan noted that all four end-market categories saw growth over 2020, led by the consumer segment, growing 10% in 2020 and 20% year-over-year in the fourth quarter.
The industrial segment faced more challenges due to infrastructure project delays and constrained demand for high-power products. Still, the revenue hit was offset by growth in home and building automation, battery tools and other applications.
The communications segment claimed the largest incremental revenue contribution in 2020, up 30% from last year, driven by power chargers for smartphones and tablets.
Looking towards the first quarter of 2021, the company is expecting flat revenues compared to Q4 2020, plus or minus 5%.
Chicago-based Littelfuse manufactures circuit protection, power control and sensing devices to a network of over 100,000 end customers across the industrial, transportation and electronics industries.
Over the fourth quarter of 2020, Littelfuse recorded $400.7 million in net sales, up 18% from Q4 2019 and ahead of its expectations. This growth was led by increased end-market demand—electronic sales grew by 17%, automotive by 22% and industrial by 13%.
Overall, net sales decreased by 4% in 2020 to $1.45 billion compared to 2019. Segment performance also fell across all end markets, with electronics dropping by 2%, automotive by 8% and industrial by 2%.
“While 2020 was a challenging year, we continued to meet our customer commitments while advancing our strategic growth initiatives,” Littelfuse President and CEO Dave Heinzmann stated in the earnings announcement. “Building on this momentum, we are seeing a strong start to 2021, which positions us for long-term growth and improved profitability.”
As outlined in a recent investor presentation, Littelfuse’s 2021-2025 growth strategy targets the sustainability, connectivity and safety markets. In January, the company completed its acquisition of HVAC components manufacturer Hartland Controls.
In the first quarter of 2020, Littelfuse expects net sales to range from $418 million to $432 million.