Why NXP Semiconductors Stock Jumped 11% in May

By Markets Fool.com

NXP's BlueBox platform. Image Source: NXP Semiconductors.

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What: Shares of NXP Semiconductors rose 10.8% in May, according to data provided byS&P Global Market Intelligence. The company announced an autonomous-vehicle computing platform in the middle of May, news that pushed the stock higher for the rest of the month.

So what: NXP became the largest automotive semiconductor vendor following its acquisition of Freescale Semiconductor last year. With a fully self-driving car seemingly inevitable at some point in the future, NXP is positioning itself to be at the center of this trend with its BlueBox platform. Announced on May 16, BlueBox combines many products that NXP already produces, like processors for radar and LIDAR, into a system that the company promises will enable major advances in self-driving cars by 2020.

NXP is not alone in its effort to be the brains behind the self-driving car. Graphics-chip specialist NVIDIA first launched its DRIVE PX platform in early 2015, updating it earlier this year with more powerful graphics processors. NVIDIA's solution depends heavily on deep learning, and it's being used by various automotive companies to develop self-driving cars. NXP's BlueBox isn't far behind, already being used by four of the top five largest carmakers in the world.

Now what: NXP may have an advantage over NVIDIA simply because it's already such a major supplier of automotive products. In an interview with IEEE Spectrum, Bob Conrad, head of NXP's automotive microcontroller business, criticized NVIDIA's approach: "They haveno intermediate processors, and that's not the way people do it today, not how they bundle options on cars.It's a Big Bang approach;I'm not saying it will never happen, but it'snot what's happening now."

There's a lot of excitement and hype surrounding self-driving cars. Investors pushed up shares of NXP following the BlueBox announcement, and shares of NVIDIA have more than doubled over the past year, in part because of the rapid growth of its automotive business. If a mass-market self-driving car becomes a reality, NXP is in prime position to benefit. But competition will probably be fierce.

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The article Why NXP Semiconductors Stock Jumped 11% in May originally appeared on Fool.com.

Timothy Green has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Nvidia and NXP Semiconductors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.