Dozens of new electric vehicles will hit showrooms in the coming years. With millions of these vehicles sold globally every year, it‘s no wonder that many start-ups in the industry have recently gone public in an attempt to capitalize on this huge opportunity. The harsh reality, however, is that only a few of these new EV makers will deliver returns for shareholders.

Suppliers, however, are another matter. Chips and related circuits are eating up a larger share of what is needed to produce modern cars. In 2022 it looks like three such suppliers will be bought: NXP Semiconductors, Micron Technology and Texas Instruments.

NXP: Highly focused on delivering automotive technology

Chips are a fundamental part of the technology of all things, and they have proliferated in every sector of the economy. As a result, most semiconductor companies are highly diversified in the end markets they serve. But NXP is a rare gem, with more than half of the company‘s sales going to the auto industry this year, and it‘s a worthwhile option if you want to benefit from the long-term growth trend of EVs without buying shares in EV startups. Consider top stocks.

NXP offers automakers a broad portfolio of solutions. From the actual battery management and powertrain components, to information systems, to advanced driver assistance (ADAS) hardware, the company has it covered. This is important because as automakers embrace new battery-powered drivetrains, other related areas of technology are starting to up the game. So when NXP strikes a deal on one part of the car, it has the opportunity to cross-sell the company‘s product portfolio in other areas as well.

All of these make up efficient hardware design and chip manufacturing operations. That said, in the third quarter, NXP revenue rose 26% year over year to $2.86 billion, but adjusted operating profit grew 64% faster to $959 million. That leaves plenty of room for NXP to continue spending on R&D, as well as invest in future supply needs, as Hyundai is eating silicon at a record pace.

As for the current supply chain crunch, even if global vehicle sales are flat in 2022 due to limited inventories, NXP can continue to grow at double-digit rates due to the increasing number of technologies employed with each new model year. As this trend is expected to continue throughout the decade (some estimates suggest that technology will account for 50% of vehicle production costs by 2030), NXP will play a major role in the EV movement. At just 25 times trailing 12-month free cash flow, the stock looks like a fair value in the new year.

Micron: Digital memory in high demand

Digital memory chip company Micron has had a tenuous relationship with shareholders throughout the company‘s history. A basic commodity and a key ingredient in more advanced semiconductor designs and computing systems, memory chips are one of the most cyclical segments of the semiconductor industry. Even small changes in supply and demand can affect pricing, which could send Micron profits soaring or plummeting.

2021 is off to a hot start as a global shortage of chips keeps pricing at the high end, putting Micron on track for record sales and profitability. But after shares hit highs early last year, concerns have grown that the next cyclical downturn in digital memory may be on the horizon. Micron just dismissed the idea, possibly pushing it back to 2023.

On the company‘s last earnings call, management said the company has sufficient supply to meet demand this year, putting Micron on track for record sales in fiscal 2022. As a result, company profitability is soaring (177% adjusted EPS growth in Q1 FY22 and is expected to double in Q2). For now at least, Micron‘s stock looks undervalued as Wall Street reassesses the company‘s lucrative profit outlook this year.

But what does this have to do with electric cars? Memory is a major component of battery and powertrain technology, as well as infotainment, connectivity and other mission-critical functions in today‘s modern cars. Combined with other growth drivers such as cloud computing and artificial intelligence (which also helps develop advanced automotive features), Micron is the top automotive technology supplier to watch right now.

Texas Instruments: The Leader in a Steady Growth Industry

If Micron represents one of the more volatile stocks in the chip world, Texas Instruments is the opposite. This old technologist is a slow and steady designer of digital and analog equipment for the industrial sector and an efficient manufacturing company.

TI manufactures a variety of hardware required for computing systems and electronic products. The company did not provide a specific sales breakdown, but the auto industry was the largest buyer. TI provides components in the areas of battery management, charging, transmission and power steering components for electric and hybrid vehicles. Paired with the company‘s digital chips, these analog parts (chips that interact with real-world inputs) make TI the best way to unleash car upgrades.

Of course, as an old-fashioned stock in the old-fashioned industry, the company is not a high-growth stock, but what TI lacks in its comprehensive expansion is to make up for the shortfall in profits and returns to shareholders through dividends, stock repurchases, etc. .

This has been a steady market winner over the past decade. The stock‘s total return of 714% over the past 10 years is 1x the total return of the S&P 500.

With automotive and industrial technology currently in high gear, TI looks like an excellent buy for 2022 and beyond. As of this writing, the stock trades at 25 times trailing 12-month free cash flow. As more consumers buy electric vehicles in the coming years, Texas Instruments (TI) will find plenty of new channels for the company‘s broad portfolio of electronic components.