Thu, Apr. 23, 12:20 PM
- While the Nasdaq is up 0.3%, chip stocks are selling off (SOXX -1.8%) after Texas Instruments, Xilinx, and Qualcomm all provided soft calendar Q2 guidance. TI and Xilinx also missed Q1 sales estimates, while Qualcomm beat.
- Decliners include Avago (AVGO -3.7%), Qorvo (QRVO -2.5%), Freescale (FSL -3%), STMicroelectronics (STM -3.6%), Atmel (ATML -2.3%), PMC-Sierra (PMCS -2.5%), Fairchild (FCS -2.2%), Cypress (CY -2.1%), Audience (ADNC -6.6%), IDT (IDTI -4.5%), Vishay (VSH -2.9%), AppliedMicro (AMCC -2.3%), and Cavium (CAVM -4.4%). NXP, ON Semi, Linear, Microchip, and Maxim remain lower after falling AH yesterday.
- With the decliners including many microcontroller, analog/mixed-signal, and telecom equipment chipmakers, TI (TXN -7.3%) might be the biggest culprit: The analog/DSP giant blamed soft telecom equipment and consumer electronics demand for its numbers, with particular weakness in mobile infrastructure (a 2014 strong point) and PCs; auto and industrial demand was healthier.
- On its CC (transcript), TI attributed the mobile weakness to delayed carrier capacity upgrades. This morning, mobile infrastructure giant Ericsson posted a Q1 miss blamed in part on weak North American 4G spending.
- Likewise, Xilinx (XLNX -1.3%), which has strong 4G infrastructure exposure, stated on its CC (transcript) wireless sales were weaker than expected due to "continued softness in North America and a weakening in China LTE business." Wired infrastructure sales were in-line, and other markets outperformed.
- Qualcomm largely blamed its guidance on the iPhone 6's share gains and a loss of chip share at Samsung, rather than industry demand issues. Altera, Freescale, Maxim, Microsemi, and Synaptics report after the close.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
- 8 days ago: Chip stocks rally following Intel/Linear's earnings
Mon, Apr. 6, 11:02 AM
- Though Chipworks' teardown indicates Samsung replaced (Broadcom partner) Murata's Wi-Fi/Bluetooth modules in the Galaxy S6 with its own, Morgan Stanley thinks the module uses a Broadcom (BRCM +0.7%) combo chip. The firm notes a Wi-Fi module page on Samsung's site shows options for Broadcom and Qualcomm silicon.
- Between the expected combo chip win and a GPS/sensor hub chip win (uncovered by Chipworks), MS thinks Broadcom's S6 content share is above expectations. "We did not expect Broadcom to add sensor hub content to the GS6."
- The firm also sees Avago (AVGO +0.6%) as a winner, estimating its content share is rising to ~$5 from ~$2-$3 with the S5. The company's 4G amplifier/FBAR filter strengths are likely helping.
- Meanwhile, NXP (NXPI - unchanged) is seen holding onto NFC controller/secure element slots for Chinese S6 models. Chipworks' teardown revealed a Samsung NFC controller, while a Chinese teardown revealed a chip said to be an NXP NFC controller. NXP's PN547 controller was used in S5 models globally.
Fri, Apr. 3, 3:20 PM
- Whereas Qualcomm (NASDAQ:QCOM) had six chips designed into many Galaxy S5 models, a Chipworks teardown of Samsung's (OTC:SSNLF) Galaxy S6 didn't turn up a single Qualcomm part.
- In addition to eschewing the Snapdragon 810 app processor (widely reported, and hinted at by Qualcomm itself) in favor of its 8-core Exynos 7420, Samsung (possibly prioritizing margins over performance/battery life) replaced Qualcomm baseband modem, power management, RF transceiver, and envelope tracking chips with home-grown parts. As expected, Samsung is also using its own DRAM/NAND chips and image processor.
- Though Chipworks says it needs to confirm, the site believes Samsung is also using its own NFC controller. NXP (NASDAQ:NXPI) supplies the S5's NFC controller (as well as the iPhone 6's).
- Broadcom (NASDAQ:BRCM) might also be a casualty of Samsung's attempts to buy local: Whereas the S5 contained a Wi-Fi module from Broadcom combo chip client Murata, Chipworks uncovered a Samsung Wi-Fi module - Samsung has already been using home-grown combo chips in cheaper phones. On the other hand, a Broadcom GPS/GNSS chip is included.
- A Texas Instruments (NASDAQ:TXN) wireless power receiver handles wireless charging for the S6; many expected IDT (NASDAQ:IDTI), which supplies a transmitter chip for the S6's wireless charging pad, would score the design. Meanwhile, Cirrus Logic's (NASDAQ:CRUS) Wolfson unit supplies an audio codec IC, and Maxim (NASDAQ:MXIM) is providing an audio amplifier and complementary power management IC.
- Skyworks (NASDAQ:SWKS) and Avago (NASDAQ:AVGO) have won RF slots: The former provides a multi-mode/multi-band front-end module and antenna switch, and the latter two power amplifier modules. Both companies also had S5 design wins.
- Not surprisingly, InvenSense (NYSE:INVN) is providing a 6-axis gyroscope/accelerometer (the MPU-6500). As was rumored, STMicroelectronics (NYSE:STM) won the touch controller slot, beating out S5 supplier Synaptics.
- While Qualcomm lost out on the S6, the company has landed a number of other Snapdragon 810 design wins for high-end Android phones. The Snapdragon 820, which sports a next-gen ARM CPU core (Kryo) and Qualcomm's Zeroth neural networking tech, begins sampling in 2H15. 3D SoCs (said to enable a 50% shrink in die size) are expected to enter testing in 2016.
- The Chipworks teardown follows a long list of glowing reviews for the S6 - reviewers especially like the 2K display and Samsung's decision to go with a metal/glass body instead of the usual plastic - and reports of production hikes and strong pre-orders. Sales start on April 10.
- Update: A Chinese S6 teardown turned up a chip said to be an NXP NFC part; its name (the 66T05) is very different from the chips in NXP's announced NFC controller line. A Sprint RDF file indicates Sprint's version of the S6 features Qualcomm's MDM9635 modem. That suggests Samsung could use Qualcomm modems for phones requiring 3G EV-DO compatibility (those used by Sprint, Verizon, and a handful of overseas carriers).
Fri, Mar. 27, 4:54 PM
- After falling hard on Wednesday amid cautious remarks from TSMC (TSM -1.1%), and falling again (to a lesser extent) on Thursday in the wake of SanDisk's warning, chip stocks rallied during the final 30 minutes of trading (SOXX +2.8%) in response to a WSJ report stating Intel is in talks to buy FPGA vendor Altera. A deal would be among the biggest in the chip industry's non-stop consolidation wave, rivaled only by NXP/Freescale.
- In addition to Altera rivals Xilinx and Lattice (previously covered), chipmakers catching a bid included Avago (AVGO +2.8%), InvenSense (INVN +2.6%), Cirrus Logic (CRUS +2.5%), Synaptics (SYNA +1.9%), Analog Devices (ADI +2.5%), QuickLogic (QUIK +3.8%) (a smaller FPGA maker), and Fairchild (FCS +3.2%).
- InvenSense has occasionally been the subject of speculation Intel or Qualcomm could make a bid. Acquisition-hungry Avago, meanwhile, is reportedly on the hunt for new deals after bidding for Freescale.
- More than a few analysts have defended chip stocks following the TSMC remarks. Jefferies and Susquehanna have argued TSMC's issues are due to share loss to Samsung (partly for Apple/Qualcomm orders), and BMO notes Nvidia (a major TSMC client) recently disclosed adding Samsung as a foundry partner. It's a fan of Synaptics and Maxim (MXIM +2.2%) due to their Galaxy S6 exposure.
- BofA/Merrill reports seeing pockets of excess chip inventory (for PCs and emerging markets smartphones) during a Taiwanese trip, but thinks Apple and Samsung phone-related orders are healthy, as are auto, industrial, and data center chip demand.
- Credit Suisse: "Our cyclical and structural call on Semis remains unchanged – cycle-to-date has been well behaved, Semi rev to global GDP is poised to inflect higher and Semis relative valuation still attractive – growing top/bottom line faster than SPX, twice the margin profile, essentially same dividend yield trading at a two turn discount."
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Fri, Mar. 27, 11:48 AM
- After falling 8.3% over the last two days thanks to a major chip stock selloff, Skyworks (NASDAQ:SWKS) is recovering some of its losses in the wake of a $15 Northland Securities target hike to $105. Northland's target was at $80 prior to Skyworks' Jan. 22 FQ1 beat.
- Meanwhile, Citi and Rosenblatt are dueling over near-term smartphone demand. Citi has respectively cut its 2015 and 2016 smartphone unit growth forecasts to 16% and 13% from 19% and 15.5% due to a belief Chinese/emerging markets demand is softer than expected. "We expect a challenging outlook for smartphone companies with high China exposure." With OEMs typically pricing phones in dollars, a strong dollar is seen hurting sales to "price-sensitive markets" in general.
- Rosenlatt, by contrast, says supply chain talks suggest little has changed. "We don’t believe that Taiwan Semi‘s and SanDisk’s forecast cuts are related to the overall smartphone industry ... We believe that Samsung is increasing [Chinese] production from 3 million per month in Q1 to 7-8 million per month in Q2. Qualcomm (NASDAQ:QCOM) and MediaTek are also seeing strong orders from China."
- In addition to Qualcomm/MediaTek, Rosenblatt expects Skyworks, Avago (NASDAQ:AVGO), Synaptics (NASDAQ:SYNA), and Micron (NASDAQ:MU) to benefit from healthy Chinese demand. The firm argued back in December Skyworks and Micron would benefit.
Wed, Mar. 25, 12:03 PM
- Chip stocks are particularly hard-hit (SOXX -3.6%) on a rough day for tech. The Nasdaq is down 1.3%, and the S&P 0.7%. Going into today, good earnings reports and ongoing M&A activity had led the Philadelphia Semi Index to rise 10% from its Jan. 30 close; the index remains up nearly 2x from its fall 2012 lows.
- AMD (AMD -7.2%) is a major decliner following a UBS downgrade. AMD rival/GPU giant Nvidia (NVDA -5.2%) and memory giant Micron (MU -3.7%) are also selling off, as are merger partners NXP (NXPI -3.8%) and Freescale (FSL -3.4%), RF chipmakers Avago (AVGO -5.2%), Skyworks (SWKS -5.3%), and Qorvo (QRVO -7.1%), LED/RF chipmaker Cree (CREE -4.1%), and high-flying video processor developer Ambarella (AMBA -4.3%).
- Other decliners include telecom chipmakers/ARM server CPU vendors Cavium (CAVM -4.8%) and AppliedMicro (AMCC -4.4%), microcontroller vendors Atmel (ATML -3.5%), Cypress (CY -5.5%), and STMicroelectronics (STM -3.5%), voice processor developer Audience (ADNC -3.7%), analog/mixed-signal chipmakers Linear (LLTC -3.7%), Maxim (MXIM -3%), and Intersil (ISIL -3.5%), FPGA maker Lattice (LSCC -3.9%), and mixed-signal/wireless charging IC developer IDT (IDTI -5.4%).
- Chip equipment, IP, and foundry providers are also underperforming. Big decliners include ARM (ARMH -4.4%), KLA-Tencor (KLAC -4.2%), Lam Research (LRCX -5.4%), ASML (ASML -4.1%), TowerJazz (TSEM -4.3%), Mattson (MTSN -4.5%), Ultratech (UTEK -4.7%), and Tessera (TSRA -6.1%). ASML has been downgraded to Hold by Banco Santander.
- TSMC (TSM -4.6%) is among the decliners in spite of a Digitimes report stating the foundry giant's sales are expected to rise 0%-5% Q/Q in Q2 - consensus is for a 2% drop - with strong Apple A8 CPU orders offsetting soft Qualcomm Snapdragon 810 orders.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
Mon, Mar. 23, 11:30 AM
- Believing the company's diversification efforts will pay off and that plenty of wireless growth remains, Citi's Atif Malik (Buy) has hiked his Avago (AVGO +0.8%) target to $160 following a talk with management. The target is equal to 17x Citi's 2016 EPS estimate.
- Malik sees Avago's wireless chip sales (up 90% Y/Y in the January quarter thanks to iPhone 6-related orders) rising 44% in 2015, aided not only by strong sales to Apple (~20% of Avago's revenue) but also an expected doubling of chip content in Samsung's Galaxy S6 (relative to the S5) to ~$5.
- With Avago set to double its FBAR filter production capacity by mid-2016, mid-teens wireless growth is expected for 2016. Avago's FBAR leadership position has contributed heavily to its mobile RF share gains, given 4G phones depend heavily on FBAR filters.
- Regarding Avago's ongoing M&A efforts, Malik thinks the company will now "look for gaining competencies in auto/industrial and IoT end markets." Those are two areas Freescale, which Avago reportedly considered buying before NXP swooped in, has healthy exposure to.
Thu, Mar. 19, 5:52 PM
- After rising 5.8% in regular trading today, specialty analog/mixed-signal chipmaker Microsemi (NASDAQ:MSCC) is up 8% since announcing yesterday morning (just before its analyst day) it's buying Ethernet chipmaker Vitesse (NASDAQ:VTSS) for $389M. Shares have made new highs along the way.
- Vitesse closed today $5.31, $0.03 above Microsemi's offer price. Ascendiant Capital's Cody Acree calls the offer "a bit low," and (given the deal is expected to be immediately accretive for Microsemi) thinks a rival bid might arrive. "Potential suitors could include Broadcom (NASDAQ:BRCM) or Marvell (NASDAQ:MRVL), who are already leaders in Ethernet and would see natural synergies in VTSS’s portfolio or Avago (NASDAQ:AVGO) who has also been particularly acquisitive."
- Meanwhile, Stifel's Tore Svanberg has hiked his Microsemi target by $5 to $40 in response to the Vitesse deal and Microsemi's analyst day presentations (slides - .pdf). "[M]anagement reiterated its strategy to maximize profitability, grow its market share in core products, while expanding its [addressable market] through new product initiatives and deeper penetration into their existing customer base."
- Svanberg adds the Vitesse deal "helps expand [Microsemi's] silicon/dollar content initiatives, especially in the comms infrastructure space and adds differentiated technology with high barriers to entry." He sees the purchase making Microsemi's goal of achieving a 60% gross margin and 30% op. margin in 2016 (compares with 56.2% and 24.4% in calendar Q4) easier to attain.
Mon, Mar. 16, 10:34 AM
Sat, Mar. 7, 3:26 PM
- With Intel's (NASDAQ:INTC) Grantley Xeon CPU launch and Web data center investments offsetting weak high-end server demand, IDC estimates global server revenue rose 1.9% Y/Y in Q4 to $14.5B, and Gartner estimates it rose 2.2% to $14B; those figures compares with Q3 growth estimates of 4.8% and 1.7%, respectively.
- Likewise, IDC estimates global enterprise storage revenue rose 7.2% Y/Y in Q4, aided by Web investments and healthy demand for mid-range systems featuring integrated flash. Q3 growth was pegged at 5.1%.
- IBM had a rough time its both the server and storage markets: IDC believes its storage share fell to 9% (tied for #3) from 12.7% a year earlier, and Gartner estimates its server revenue fell 14% if one excludes Big Blue's x86 server unit, which was just sold to Lenovo. After accounting for the x86 sale, IDC estimates IBM's server share was at 13.7% (#3) vs. 26.8% a year ago.
- HP (NYSE:HPQ) fared a little better: IDC has its server share falling fractionally to 26.8% (still #1 overall), and its storage share falling to 13.8% (#2) from 14.1%. The company's x86 server unit has been gaining ground against IBM's former business, but its high-end server sales remain weak.
- Cisco's (NASDAQ:CSCO) UCS server line (recently refreshed) continues to gain ground: Its share rose to 5.3% (#5) from 4.5%, with full-year revenue pegged at $2.9B. With the help of aggressive pricing and x86 growth, Dell's server share rose to 16.7% (#2) from 15.2%, while its storage share slipped to 9% (tied for #3) from 9.2%. Lenovo (OTCPK:LNVGY) claimed a 7.6% server share (#4) thanks to the IBM deal, kicking Oracle (NYSE:ORCL) out of the top-5 along the way.
- EMC, whose high-end storage sales have been pressured (mid-range/flash demand has been better), saw its storage share drop to 22.2% (still #1) from 23.1%. NetApp (NASDAQ:NTAP), which posted an FQ3 miss and light guidance last month amid tough mid-range competition from EMC and others, saw its share drop to 7.2% (#5) from 8%.
- Not surprisingly, the white-label hardware beloved by Google, Facebook, Amazon, etc. continued to take share. IDC estimates such hardware, referred to as ODM Direct, claimed server and storage shares of 8.2% and 12.8% vs. 6.4% and 9.9% a year ago.
- Sales of x86 servers, the lion's share of which run on Intel CPUs, rose 7.1% to $11.5B. Sales of non-x86 servers fell 14% to $3B, thanks to declining demand for both mainframes and UNIX servers running proprietary RISC CPUs. "Early-stage revenue" was seen for ARM (NASDAQ:ARMH) servers, largely via HP's Moonshot line.
- Other companies with strong server and/or storage exposure: STX, WDC, SMCI, MLNX, AVGO, QLGC, RHT
Thu, Mar. 5, 8:58 AM
Wed, Mar. 4, 4:17 PM
- Avago (NASDAQ:AVGO) held "advanced talks" to buy microcontroller/network processor/base station amplifier maker Freescale (NYSE:FSL) before the chipmaker agreed to a $16.7B deal with NXP (NASDAQ:NXPI), Reuters reports.
- Avago reportedly got cold feet after Freescale's shares surged on an NY Post M&A report last month. However, sources state the company is "still looking for an acquisition that could be transformative."
- Over the last 15 months, Avago has struck a $6.6B deal to buy LSI (it later sold parts of LSI to Seagate and Intel), a $309M deal to buy PLX Technology, and (most recently) a $609M deal to buy Emulex, expanding into a number of enterprise hardware markets along the way.
- $31B worth of chip industry M&A deals took place last year, as chipmakers large and small try to reap cost and product synergies by merging with peers.
- Avago rose 0.9% today to $129.40, leaving it close to Monday's all-time high of $130.87.
Wed, Feb. 25, 6:19 PM
- In addition to beating FQ1 EPS estimates (while posting in-line revenue), Avago (NASDAQ:AVGO) is guiding for FQ2 revenue to be down 3% to up 1% Q/Q. That implies a range of $1.59B-$1.65B, above a $1.54B consensus.
- Driving the FQ1 EPS beat: Gross margin was 59%, up from FQ4's 58% and the year-ago period's 52%, and above guidance of 57.5% (+/- 1%). FQ2 GM guidance is at 58.5% (+/- 1%).
- Also helping EPS: Operating expenses totaled $293M, up from $142M a year ago thanks to acquisitions, but down from $303M in FQ4 thanks to cost cuts.
- As expected, strong iPhone-related sales acted as a big FQ1 tailwind: Wireless product sales (40% of total revenue) rose 6% Q/Q and 90% Y/Y. Wired infrastructure (21% of total revenue, boosted by the PLX and LSI acquisitions) fell 1% Q/Q and rose 52% Y/Y. Enterprise storage (29% of revenue, a product of the LSI acquisition) rose 5% Q/Q. Industrial/other (10% of revenue) fell 4% Q/Q and rose 21% Y/Y.
- Avago has risen to $119.03 AH, making new highs in the process. RF component rivals are ticking higher: Skyworks (NASDAQ:SWKS) +0.9% to $88.49. Qorvo (NASDAQ:QRVO) +1.1% to $67.92.
- Avago's FQ1 results, Emulex acquisition, PR
Wed, Feb. 25, 4:48 PM
- In tandem with its FQ1 results, Avago (NASDAQ:AVGO) announces it's buying Fibre Channel/Ethernet connectivity hardware maker Emulex (NYSE:ELX) for $609M net of cash and debt, or $8/share. The price represents a 26% premium to Emulex's Wednesday close.
- The deal is expected to be funded with cash on hand, and to close in the second half of Avago's FY15 (ends Nov. 1). It's expected to be immediately accretive.
- Avago is less than a year removed from buying LSI, whose product line includes RAID storage controllers, storage adapter cards, hard drive SoCs, and network processors. Much of Emulex's product line, which includes Fibre Channel and Ethernet adapter cards, Ethernet and storage controllers, and network monitoring hardware, is complementary to LSI's and/or services the same hardware OEMs.
- Avago is up 5.3% AH to $118.64 following the acquisition news, its FQ1 EPS beat, and strong FQ2 revenue guidance. Emulex is up 24.8% to $7.94. Emulex archrival QLogic (NASDAQ:QLGC) is up 4% to $15.16.
Wed, Feb. 25, 4:13 PM
Tue, Feb. 24, 5:35 PM
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