Print  |  Send  |   

Chip stocks have room to grow

February 13, 2012 // Dylan McGrath

Chip stocks have room to grow

Semiconductor stocks should continue to appreciate until at least early summer, now that business is picking up and the chip market upturn has entered a new phase, according to Christopher Danely, an analyst with JP Morgan.

Page 1 of 2
In a report circulated Friday (February 10), Danely wrote that many semiconductor companies and distributors, including Texas Instruments Inc., Microchip Technology Inc., Xilinx Inc., and Arrow Electronics Inc., have stated that their bookings have increased since mid-December. Data from the Semiconductor Industry Association also indicated that chip sales increased more than the seasonal average in December compared with November, Danely said.

Danely said the Philadelphia Stock Exchange's SOX semiconductor index has appreciated 27 percent since he called a bottom to the industry downturn in mid-September, well above the 16 percent gain posted by the S&P 500 in that timeframe. "Despite the move in the SOX, we believe the majority of upside to consensus estimates is in front of us as semiconductors are still under-shipping demand by at least 10 percent," Danely wrote.

Danley said the semiconductor market has now entered "phase III" of the industry upturn, with chip companies report improving order rates due to inventory replenishment. "We expect most companies to reiterate that order rates are improving throughout the quarter," Danely said.

In "phase IV" of the upturn, which Danely expects to begin in March or April, semiconductor companies will begin raising sales and earnings targets due to continued improvement in orders, Danely said.

While a number of investors have expressed concern that, based on the 27 percent improvement in the SOX since September, an upturn is already priced into current chip stock valuations. "We believe there is still plenty of upside remaining as semiconductors are under-shipping end demand by more than 10 percent,: Danely wrote. "As a result, we expect order rates to continue to improve in [the first half of 2012] due to inventory replenishment as demand now appears stable."
1 | 2 | Next page

All news

Analog & Mixed Signal ICs

Follow us

Fast, Accurate & Relevant for Design Engineers only!

Technical papers     

Linear video channel


Read more

This month, Cherry is giving away five of its Energy Harvesting Evaluation kits, worth over 266 Euros each, for EETimes Europe's readers to win. Cherry's energy harvesting technology benefit mostly applications where a complex wire assembly and/or batteries would be inappropriate.

The required RF-energy is created by the mechanical actuation of the switch and the data is transmitted...


Design centers     

Infotainment Making HDTV in the car reliable and secure

December 15, 2011 | Texas instruments | 222901974

Unique Ser/Des technology supports encrypted video and audio content with full duplex bi-directional control channel over a single wire interface.


You must be logged in to view this page

Login here :