The carrier recently doled out contracts worth $3 billion and it is looking to build more than 200,000 base stations in around 30 provinces in China. China Mobile Ltd. (ADR) (NYSE:CHL) is the world’s largest telecom carrier and Xilinx’s revenue can receive a good boost if it climbs onto the 4G bandwagon in China.
In North America, the acquisition of Sprint by Softbank gives it a much-needed resource for expanding into more markets, increasing its tally of 151 markets as it aims to make a dent in AT&T and Verizon‘s markets. This competition among telecom players in the U.S. and China is good news for Xilinx’s telecom business.
Industrial, aerospace, and defense is the company’s other important segment with a revenue share of 37%. In the previous quarter, sales from this segment improved 10% on a sequential basis, primarily driven by a government defense program. Future growth is primarily dependent on government spending .
The programmable logic devices (PLD) market is expected to growth at a compounded annual growth rate of 12.9% between 2012 and 2016 . One of the key drivers behind the growth of PLD market is the need to reduce power consumption. This segment is a virtual duopoly of Xilinx and Altera Corporation (NASDAQ:ALTR). Going forward, the company can expect growth in revenue coming from its PLD segment.
Stiff competition from Altera Corporation (NASDAQ:ALTR) and dwindling PC sales (a significant consumer of semiconductor chips) are headwinds for Xilinx.
Altera Corporation (NASDAQ:ALTR) reported earnings of $0.31 per share in the second quarter of 2013, in line with consensus estimates. Total revenue of $421.8 million missed the consensus estimate of $425 million, however. Sequentially, Altera Corporation (NASDAQ:ALTR) witnessed solid performance from all of its geographical regions except the Americas, and experienced solid sales from all of its product categories and end markets .
Altera Corporation (NASDAQ:ALTR) expects sales to grow in the 5%-9% range sequentially in the third quarter of 2013. As a result of an expected turnaround in telecom and wireless, auto, industrial and military, and networking and storage end markets, the company expects revenue improvement going forward.
Conclusion
Xilinx’s business has been growing in a stable manner, and positive developments in end markets such as telecom and defense have been driving growth. The company’s positive guidance for the present quarter suggests that it sees sustained strength in the future, and the expansion of LTE in North America and China should provide more tailwinds going forward.
The article This Semiconductor Company Looks Good originally appeared on Fool.com and is written by Amal Singh.
Amal Singh has no position in any stocks mentioned. The Motley Fool owns shares of China Mobile.
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