SEMTECH CORP (SMTC)

Semtech is a high-performance semiconductor, IoT systems and cloud connectivity service provider, incorporated in Delaware in 1960. It designs, develops, manufactures and markets a wide range of analog and mixed-signal semiconductors, advanced algorithms, wireless semiconductors, connectivity modules, gateways, routers and connected services. On January 12, 2023, it acquired all of the shares of Sierra Wireless, Inc. in an all-cash transaction of about $1.3 billion, combining the ultra-low power benefits of LoRa technology with the higher bandwidth of cellular. In May 2022 it sold its high reliability discrete diodes and assemblies business to Micross Components for $26.2 million.

The company reports four segments. Signal Integrity offers optical data communications and video transport ICs, ranging from 100Mbps to 400Gbps, for data centers, enterprise networks, PON and wireless base station optical transceivers, plus broadcast and video-over-IP products for professional audio video. Advanced Protection and Sensing offers transient voltage suppressors, filter and termination devices, and proximity and user-interface sensing products. IoT System includes LoRa devices and RF technology, power products, and Sierra Wireless modules (LTE-M, NB-IoT, 5G and LoRa), gateways and routers. IoT Connected Services provides wireless connectivity and cloud-based services such as SIM and subscription management, device and data management, and geolocation. Fiscal 2023 net sales were $756.5 million: Signal Integrity $304.1 million, Advanced Protection and Sensing $236.9 million, IoT System $210.3 million and IoT Connected Services $5.2 million.

Products are sold mainly into infrastructure (38% of fiscal 2023 net sales), high-end consumer (21%) and industrial (41%) end markets. Customers are primarily OEMs and their subcontractors, and IoT device makers and enterprises. Applications include data centers, base stations, smartphones, tablets, set-top boxes, smart metering, asset tracking, automotive and medical. About 85% of fiscal 2023 sales went through independent distributors and 15% directly. Sales outside the U.S. were 87% of the total, with China (including Hong Kong) at 53% and South Korea at 5%. Significant customers include Trend-tek Technology (16% of net sales), Frontek Technology (13%), CEAC International (11%) and Arrow Electronics (8%). Backlog was about $182.3 million at fiscal year-end, and demand is somewhat seasonal, with the fourth fiscal quarter typically softer.

The company outsources most manufacturing to third-party foundries, assembly and test contractors, and electronics manufacturing services partners. Many of these suppliers are in the U.S., Taiwan, China, Vietnam and Malaysia. Direct sales staff in North America, Europe and Asia-Pacific manage independent sales representatives and distributors, some of whom also carry competitors' products. Foreign subsidiaries such as Semtech (International) AG serve European and Asian markets. Semtech Canada, based in Burlington, Ontario, and Sierra Wireless, based in Richmond, British Columbia, serve the Canadian market.