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What happened

ON Semiconductor (NASDAQ:ON) rose 14.1% in September 2016, according to data from S&P Global Market Intelligence. The designer and manufacturer of power controllers and logic chips is enjoying strong investor interest in ON's largest and fastest-growing division, the automotive computing sector.

So what

Automotive electronics accounted for 33% of ON's sales in 2015, rising to 36% in the recently reported second quarter of 2016. That segment grew its sales 15% year over year at a time when the company overall saw revenue rising by just 7%. Investors are convinced that automotive chips will remain a big growth driver for ON over the next several years.

That market was under an intense spotlight in September as several major players made important moves. None of these events involved ON directly, but sometimes it's good enough just to be on the right scene at the right time.

Moreover, ON closed the acquisition of fellow power-controller expert Fairchild Semiconductor, and then ended the month by refinancing its buyout-bloated debt holdings.

ON Chart

ON data by YCharts.

Now what

Modern cars are already packed to the rafters with number-crunching features, such as advanced infotainment units and computer-controlled fuel-injection systems. That market will only grow larger over the next few years as self-driving cars go mainstream. ON is smart to double down on this exciting market

ON investors have had a great run over the last three months. The stock has gained a market-stomping 39% since early July, helped by the Fairchild buyout and a strong second-quarter report. We're about three weeks away from the first earnings report since ON closed the Fairchild deal. Keep an eye out for that if you want to know where the combined company is going next.

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