Chip manufacturers rise thanks to automobile use image

If you own a high-end smartphone or tablet, chances are the latest silicon from Apple, Qualcomm or Nvidia powers them. In the near future, there are also great odds they would be found in your car as well.

Nvidia, for example, a computer chip maker that is very bullish about expanding into automobiles, already performs twice better than the Standard & Poor’s 500 Index, with the shares rising 15% so far this year. Silicon Valley makers like Nvidia are faced with declining revenue from the traditional computer business, so they’re keen to expand into cars, especially as they become filled with driver-assistance and entertainment systems.

“There is a growing recognition that this is no longer a one-trick pony that’s inextricably tied to PCs,” said Matthew Kaufler, manager of Federated Investors Inc.’s Clover Value Fund. “They have done a great job starting to capture these incremental growth opportunities like autos.”

According to a research from IHS, the market for automotive chips should go up 6.1% to $27.9 billion this year, with the fastest projected rise in the area of automated driver-assistance systems, forecasted to climb 13% each year by 2020. Automakers already use both Qualcomm and Nvidia chips to keep their cars connected to the Internet and they will soon use them to allow the car to become aware of what goes around it, as the industry advances towards the era of the connected-car.

Via Bloomberg