Semtech Corporation SMTC recently partnered with Amazon AMZN to collaborate on the latter’s network, Amazon Sidewalk.
Amazon Sidewalk is a low-bandwidth, long-distance wireless network that is used to connect smart devices, both inside and outside one’s home. Importantly, even when devices fall offline, the network allows the operation of a few functions.
Therefore, with the integration of Semtech’s LoRa platform in the Amazon Sidewalk network, the range of a customer’s home network can be extended to connect both outdoor and indoor low-bandwidth smart home products. These products include smart lights, pet trackers, sensors for asset tracking, smart irrigation, among others, which are used for residential purposes.
The LoRa Technology enables long-range connectivity of IoT devices and aids in connecting sensors to the cloud. Its long-range performance and low power consumption requirement enhance overall performance. Moreover, this technology helps in real-time communication of data and analytics to enhance efficiency, as well as productivity.
Semtech is witnessing growing strategic alliances and contracts, thanks to cost-efficient abilities of the LoRa technology in creating as well as deploying IoT solutions.
Consequently, the move is likely to boost the adoption rate of the company’s LoRa technology, which in turn will drive the top line.
Semtech Corporation Price and Consensus
Semtech Corporation price-consensus-chart | Semtech Corporation Quote
Market Opportunities to Aid Growth
This deal will strengthen Semtech’s presence in the smart home market on the back of increasing Internet users, rising importance of home monitoring in remote locations, and the growing need for energy-saving as well as low carbon emission-oriented solutions. Moreover, the rapid proliferation of smartphones & smart gadgets, growing concerns about safety and security, along with convenience among people are expected to fuel the demand for smart home solutions.
Per a report from MarketsandMarkets, the smart home market is expected to reach $78.3 billion in 2020 to $135.3 billion by 2025. It is expected to witness a CAGR of 11.6% in the 2020-2025 period.
According to another research firm, IHS Markit, the global smart home market is expected to reach more than $192 billion in 2023.
As the current networks are limited in connectivity and range, the integration of LoRa technology into Amazon Sidewalk network will enable customers to have access to smart home solutions with extended connectivity and battery life.
The latest deal will help Semtech to reap benefits from potential growth in the smart home market.
This will aid the momentum of the company’s LoRa-based solutions in this space.
IoT Market’s Prospects
IoT devices have been gaining significant traction in recent times. These devices have been successful in making an impact across all end markets served by the company.
Per IOT Analytics, the number of active IoT devices is expected to grow from 7 billion in 2018 to 10 billion and 22 billion by 2020 and 2025, respectively, including devices on the consumer and enterprise side.
Presently, LoRaWAN networks are operating in many countries. It expects the LoRaWAN open protocol to reach more countries in the near term. Industry experts expect four out of every 10 long-range IoT connections to be powered by LPWAN, with LoRaWAN being the dominant player.
We believe Semtech is well poised to rapidly penetrate into the expanding IoT market, aided by the highly popular LoRa technology.
Zacks Rank & Stocks to Consider
Currently, Semtech carries a Zacks Rank #5 (Strong Sell). Some better-ranked stocks in the broader technology sector include Dropbox DBX and Etsy, Inc. ETSY, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for Dropbox and Etsy is pegged at 34.4% and 28.5%, respectively.
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