EMAIL
PRINT
PERMALINK
TWITTER
FACEBOOK
YAHOO! BUZZ
STUMBLEUPON
DIGG
FARK
REDDIT
MYSPACE
LINKEDIN
DEL.ICIO.US
By Tiernan Ray
Wells Fargo chip analyst David Wong this morning cut his outlook on the semiconductor stocks to Market Weight from Overweight, writing that while he’s still positive on the outlook for chip sales, his view has moderated following a 32% rise in chip shipments last year and a 70% rise from trough levels in 2009.
“We continue to expect solid semiconductor industry growth in 2011, of 10-15%, with many chip companies maintaining the high levels of profitability demonstrated in 2010,” writes Wong.
“The trend for worldwide semiconductor sales continues to track roughly in line with to somewhat above our expectations.” Inventory levels are “appropriate,” adds Wong, and although capital spending has been rising, he expects that plant and equipment will continue to get utilized, as “capacity utilization … will stay in a very healthy 90% to 95% range through 2011.”
In particular, January’s shipment data for semis of 1.5% growth in the rolling three months through January, according to the Semiconductor Industry Association’s data, was a little better than Wong expected, with particular strength in discretes and ICs, somewhat less so in opto-electronics components and sensor products.
Memory chips, however, are one area where Wong sees weakness this year, with “pricing risk growing.”
Wong’s top picks are Intel (INTC), Qualcomm (QCOM), Linear Technology(LLTC), Analog Devices (ADI), Xilinx (XLNX), and Altera (ALTR).
Wong lumps into the category of stocks with company-specific risk, or high valuations, or low profit, and therefore less desirable, Broadcom (BRCM),Advanced Micro Devices (AMD), Microsemi (MSCC), Micron Technology (MU).
Wong also reiterated Market Perform ratings on Texas Instruments (TXN),Maxim (MXIM), and National Semiconductor (NSM).
In a weak market overall today, semi stocks are trading broadly lower, with Intel down 31 cents, or 1.4%, at $21.25, QCOM off 55 cents, or 1%, at $57.60, and TXN down 40 cents, or 1%, at $35.87.
Previously:
INTC: Baird Ups To Buy on Broad-Based Semi Recovery, Friday, March 4th, 2011;
TXN: JP Morgan Gets Constructive on Semis, Still Cautious on INTC, March 2nd, 2011.