Piper's Gus Richard says checks indicate foundries have cut production of Broadcom's (BRCM -2.4%) chips, something he attributes in part to weaker-than-expected Galaxy S4 demand, share losses to Qualcomm (QCOM -2%), and a mix shift towards low-end Chinese smartphones (where Broadcom's combo chip share is lower).
He also sees Qualcomm being affected by S4 weakness, and thinks its royalty growth will slow as smartphone ASPs are pressured by a shift towards emerging markets sales. Qualcomm recorded a $227-$233 March quarter ASP for royalty-bearing devices, up from $214-$220 in the Dec. quarter.
TSMC (TSM -1.2%), the top foundry partner for both Broadcom and Qualcomm, is also lower. The company just announced R&D chief Chian Shang-yi, who had been on a shortlist of candidates to replace Morris Chang as CEO, is retiring on Oct. 31.
Chiang, 82, has said he will retire as CEO next year, but remain chairman.