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Chip stocks underperform following Wells Fargo downgrade

  • Wells Fargo's David Wong has cut his rating for the semiconductor industry to Market Perform, citing Intel and TSMC's (TSM +1.6%) Q4 guidance, and downbeat commentary from tech companies about electronics demand. That, along with an adverse reaction to AMD's Q3 numbers and Q4 guidance, is leading chip stocks to underperform (SOXX -0.2%) on a day when Internet stocks are flying higher thanks to Google.
  • Intel's guidance for seasonally strong Q4 implies only a 2% Q/Q sales increase at the midpoint. TSMC, which delivered its Q3 results yesterday, is guiding for Q4 revenue to fall to NT$144B-$147B ($4.9B-$5B) from Q3's NT$162.58B ($5.53B).
  • Though Q4 tends to be seasonally weak for foundries, TSMC did partly attribute its guidance to customer inventory adjustments and softening high-end mobile device demand.
  • Wong's downgrade is accompanied by ratings cuts for analog chipmakers International Rectifier and Monolithic Power. It comes two weeks after trade association SIA reported global chip sales rose 6.4% Y/Y in August; that was the fastest growth rate posted since March '11.
  • Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Comments (1)
  • wigit5
    , contributor
    Comments (3967) | Send Message
     
    Considering $INTC decent run up after earnings I consider this a healthy pause!
    18 Oct 2013, 12:38 PM Reply Like
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