EV Stocks Powering Up?: Simon Erickson | Investing With IBD

TL;DR

Wolf Speed and ON Semiconductor are two semiconductor companies that show strong potential in the electric vehicle industry and the silicon carbide market. While Wolf Speed is focused on developing batteries with superior energy density and faster charge times, ON Semiconductor is repositioning itself as a profitable player in the high-end market. Both stocks have shown solid relative strength and strong earnings growth.

Transcript

foreign hello and welcome to the investing with IBD podcast sponsored by Direction it is Justin Nielsen here along with the special weekly guest that we always have every week Arusha Puris O'Neill Global advisors portfolio manager how are you doing Arusha I'm doing well Justin excellent excellent so it is September 14 2022 and we are very glad to w... Read More

Key Insights

• 🚙 The electric vehicle industry is driving the demand for innovative semiconductor materials, such as silicon carbide, which offers improved performance and efficiency.
• 🔋 QuantumScape, Wolf Speed, and ON Semiconductor are positioned to benefit from the growing market demand for electric vehicle components, particularly in the battery and power electronics sectors.
• ✋ While QuantumScape's potential is high risk and dependent on successful commercialization, Wolf Speed and ON Semiconductor offer more established market positions and solid earnings growth.
• 🍉 Investors should closely monitor technological advancements, partnerships, and market trends in the electric vehicle industry to assess the long-term potential of these semiconductor companies.

Questions & Answers

Q: What are the key advantages of utilizing silicon carbide materials in electric vehicle batteries?

Silicon carbide offers higher energy density, faster charge times, and greater efficiency at higher temperatures compared to traditional silicon materials. This makes it ideal for electric vehicles, enabling improved performance and reduced energy losses.

Q: How do Wolf Speed and ON Semiconductor differ in their approach to the electric vehicle industry?

Wolf Speed is focused on developing batteries with superior energy density and faster charge times. ON Semiconductor, on the other hand, is strategically repositioning itself as a profitable player in the high-end market, leveraging its expertise in silicon carbide technology.

Q: Are there any upcoming milestones or events that could impact the success of these companies?

Wolf Speed follows a binary events model, with success dependent on partnerships and commercialization progress. Any disruptions or failures in partnerships could impact the company's prospects. ON Semiconductor, with its established market position, will largely depend on its ability to deliver strong earnings growth and expand its presence in the silicon carbide market.

Q: What is the market's perception of these companies, and how are they currently priced?

Quantumscape is considered high risk, while ON Semiconductor is viewed as a more established player. The market has priced in increased potential for ON Semiconductor, resulting in a higher valuation. However, Wolf Speed's market potential and profitability make it an interesting opportunity as well.

Summary & Key Takeaways

• Wolf Speed is a pure play on silicon carbide materials for electric vehicle batteries. With partnerships with major automakers, it aims to commercialize its technology by 2025-2026. The company's progress and potential market demand for its batteries make it an exciting prospect.

• ON Semiconductor, a spin-off of Motorola, has transformed itself into a high-end semiconductor company. It has divested its lower-margin businesses and focused on silicon carbide technology. With strong earnings growth and a solid market position, it offers a less risky investment compared to other players.