Semiconductors are present all around us — from computers to mobile phones to cars and even fighter planes. Because of this, investing in a semiconductor company that is diversified can enable investors to benefit from different industries. One such option is Xilinx, Inc. (NASDAQ:XLNX), a company that makes products and components for consumer, telecom, automobile, and industrial applications among other applications.
The company has been on a roll recently, and its latest quarterly results released in July are proof. Let us take a look at its latest results and see how the company might perform in the future.
Diversification helps
Xilinx, Inc. (NASDAQ:XLNX) reported revenue of $579 million , which was well above the consensus estimate of $550 million. This marked a slight decline from last year’s quarter, but an increase of 8.8% sequentially. The year-over-year decline was attributed to weaker-than-expected sales in the communications and data center segment as well as the consumer and automotive end markets.
The decline in the two segments was partially offset by gains in the industrial, aerospace, and defense markets. Sequentially, all the end markets posted robust performances, leading the company to exceed its own sequential growth guidance of 1% to 5%. Sales of new products increased 75% year-over-year.
This diversification is a great advantage to have, as weakness in one segment can be offset by strength in another. Looking forward, Xilinx, Inc. (NASDAQ:XLNX) has solid plans to grow its business.
Prospects
The company’s transition to 28-nanometer (nm) nodes, development of 20nm nodes, and general recovery in the semiconductor market are some of the company’s tailwinds. Xilinx, Inc. (NASDAQ:XLNX) is determined to stay ahead of the competition, and its latest innovations like “UltraScale” are focused on delivering better performance. UltraScale devices are expected to power the next generation of smart vision systems, smart networking equipment, high-performance computing devices, and intelligent surveillance and reconnaissance systems.
Telecom is one of the focus areas for Xilinx, Inc. (NASDAQ:XLNX). The company is aiming to capture a larger share of the opportunity presented by service providers across the world that are expanding their LTE infrastructures. Xilinx, Inc. (NASDAQ:XLNX) has set its eye on two of the biggest telecom markets of the world – North America and China.
The Chinese LTE expansion involves two major players, China Mobile Ltd. (ADR) (NYSE:CHL) and China Telecom. The impact on revenue as a result of the 4G expansion by these two is expected to start showing up later this year, driven by China Mobile Ltd. (ADR) (NYSE:CHL). China Mobile will be increasing its capital expenditure to $30 billion , with half of that anticipated to be spent on the carrier’s TD-LTE development.
