Downturn in 2025 Should Be Followed by Strong Recovery; Our Fair Value for Melexis Is EUR 92

Melexis is an asset-light, family-owned company focused on the sale of sensor integrated circuits, a type of analog/mixed-signal chip, to the automotive industry. In the past decade, Melexis has grown by almost 10 times organically, strengthening its competitive position by improving the versatility of its product portfolio. It now owns 75% of the intellectual property of its product sales, compared with 40% in 2006. We estimate Melexis has many years of growth ahead, given that the number of chips per car (combustion, hybrid, or electric) is expected to grow at high single digits annually as more chips are added to every car to improve user experience and safety.