Growth Stock Strategist pick Integrated Device Technology is in the thick of a major shift in transportation: the rise of smart cars with advanced electronics that allow driver assistance, hazard alerts, better security and Internet access.

Many analysts put the adoption of smart cars right about where smartphones were a decade ago—just catching on and ripe for a popularity explosion. In four years the smart-car market will expand to about 250 million vehicles worldwide, or one in five of all vehicles on the road, according to Connecticut-based research firm Gartner. That’s about a tenfold increase from 2014.

Market researcher Markets and Markets sees the global smart-car industry soaring to nearly $47 billion by 2020, up from about $25 billion in 2014. Others forecast smart-car sales will top $100 billion by 2020. So no matter who’s doing the estimating, growth should be huge.

But why should this mean anything to Integrated Device Technology (NYSE: IDT), which makes semiconductors mainly for cloud-based data centers, communications networks and wireless mobile device charging? Here’s why: In December Integrated became a force in the smart-car industry with a $307 million acquisition.

German Engineering

The company Integrated bought was ZMDI, a privately held German semiconductor maker with a strong presence in the automotive sector. At the time, Integrated’s management estimated the buyout would initially add $20 million of revenue each quarter, a 14% gain from the $143 million quarterly average in the fiscal year before the deal.

That estimate is proving accurate. During the three months ending in March, Integrated’s first full quarter since the acquisition, ZMDI contributed revenue of $16 million. And that sum should rise steadily, said CEO Gregory Waters during Integrated’s latest quarterly conference call.

The acquisition should also boost profits, starting with an additional 10 cents a share in the fiscal year ending in March 2017, projects Anthony Stoss, an analyst at Minnesota-based investment banking firm Craig-Hallum. Stoss has a price target of $30 a share for Integrated stock, which implies a nearly 60% gain potential from the current price of about $19. Our price target is even higher—$45—as we believe most analysts are underestimating the company’s growth potential with ZMDI in the fold.

Through ZMDI, Integrated now has many products the fast-growing smart-car market demands. They include sensors that enhance fuel efficiency and reduce emissions, as well as perform routine functions such as HVAC (heating, ventilation and air-conditioning), fuel level monitoring and anti-lock braking. About a year ago, ZMDI introduced a multi-function automotive chip that controls the defroster, turn signal and mirror adjustments.

Under new ownership, ZMDI continues to innovate. At a recent Sensors Expo & Conference in San Jose, California, for example, it unveiled a new signal amplifier that improves all types of automotive sensors. In February, Integrated announced it was teaming up with technology research firm 5G Lab Germany to find ways of using RapidIO technology to connect cars to communications networks and create self-driving vehicles.

RapidIO is a category of high-performance semiconductors developed to keep data from bottlenecking and slowing down computerized systems. Integrated’s RapidIO products are already found in wireless phone networks, as well as in aerospace and defense systems.

Besides auto-related semiconductors, ZMDI manufactures chips for the industrial, medical and consumer electronics sectors. These include sensors necessary for factory automation, blood pressure and body temperature monitoring, and mobile navigation.

Among its latest advances is a sensor that monitors and regulates the power use of battery-operated equipment such as emergency lighting and many medical devices. ZMDI also recently introduced a chip that improves the accuracy of high-precision technologies like motion sensors, weather-forecasting equipment and mechanical pumps that give exact medication dosages.

Business Already Booming

While making acquisitions is a common way to jumpstart stalled growth, that wasn’t Integrated’s motive for purchasing ZMDI. As Waters pointed out during the conference call, “we didn’t have to buy ZMDI…we don’t have to buy anything to grow this company.” The acquisition simply accelerates Integrated’s already strong performance.

For the past three fiscal years ended in March, a period that includes barely any contribution from ZMDI, annual revenue rose more than 40% to $697 million. The bottom line soared from a $20 million loss to nearly a $200 million profit. Cash flow has rarely been stronger, and profit margins have never been higher.

A key factor in Integrated’s success: leadership in the dynamic wireless charging market. Analysts project this market will expand to $13.7 billion by 2020 from $1.9 billion in 2014, a 39% compound annual growth rate.

In the wireless charging market, Integrated supplies several major mobile device makers such as Samsung Electronics, which uses Integrated’s wireless charging components in the new Galaxy S7 smartphone (among other devices). Similar Integrated components are found in the Apple Watch, wireless chargers built into IKEA furniture and in the Ticwatch, a smart watch made by a prominent Chinese technology company called Mobvoi.

Integrated shows strength on other fronts, too, recently announcing, for example, that a new blood sugar monitor containing the company’s sensors was approved for use in Europe by patients with diabetes. In cloud computing, Integrated has long been the top supplier of high-performance semiconductors that speed up server performance by enhancing memory. Analysts expect that market to exceed $450 million by 2019, about a threefold increase from 2011.

Because it’s globally diversified and only does a tenth of its business in Europe, Integrated should be resistant to any economic turmoil associated with the United Kingdom’s decision to leave the European Union. So despite the surprise “Brexit,” the company can still achieve consensus estimates for 18% annualized earnings growth.