Thu, Mar. 26, 10:50 AM
- The Philadelphia Semi Index (SOXX -1.8%) is now down 6% over the last two days. Today's losses come after NAND flash giant SanDisk issued a Q1 warning and withdrew its full-year guidance - price pressure, soft enterprise sales, and delayed product qualifications were all blamed.
- Meanwhile, some are partly blaming yesterday's big selloff on cautious remarks from TSMC (has an estimated ~50% global foundry share) at a Credit Suisse conference. CS analyst Randy Abrams reports TSMC (NYSE:TSM) has observed "a slowdown in the past 4-5 weeks due to US$ strength impacting European and emerging market purchasing power," and that inventories "will be a few days above seasonal exiting 1Q15." Pac Crest downgraded TSMC two weeks ago on inventory concerns.
- Following an Asian trip, Susquehanna's Chris Caso has argued there isn't too much to be alarmed about, though he admits forex could be an issue. "There’s mixed signals here and there. We weren’t picking up anything that was tremendously different across the supply chain. PCs were the weakest area. That’s really not a surprise."
- RF chipmakers Skyworks (SWKS -4.6%) and Qorvo (QRVO -2.1%), among 2014's best performers, are again selling off; peer Avago is off only slightly. Also seeing further profit-taking are Ambarella (AMBA -3%), NXP (NXPI -3.6%), Freescale (FSL -2.8%), Cavium (CAVM -3.2%), and STMicroelectronics (STM -4.5%).
- Among equipment makers, Axcelis (ACLS -2.9%), Aixtron (AIXG -3.6%), Veeco (VECO -3%), and Kulicke & Soffa (KLIC -2.5%) are declining. A selloff in European equities could be affecting Aixtron, NXP/Freescale, and STMicro.
- Chip ETFs: SMH, XSD, PSI, SOXL, USD, SOXS, SSG
- Update: Credit Suisse, Goldman, and Deutsche have each offered thoughts on the chip selloff.
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
Fri, Mar. 13, 10:22 AM
- Declaring NXP's (NASDAQ:NXPI) $16.7B cash/stock merger with Freescale (NYSE:FSL) will create "a powerhouse in the semiconductor industry," Needham's Rajvindra Gill has launched coverage on NXP with a Strong Buy rating and $140 target.
- Gill notes NXP/Freescale will be the world's biggest automotive chip and microcontroller supplier (as previously noted by the companies), with respective shares of 13% and 15%. He adds the post-merger company will be a top player in the growing mobile payments and IoT chip markets.
- NXP/Freescale are expected to see 2016 EPS of $7.44, and 2017 EPS of $9.00. $2.3B/year in free cash flow is considered possible.
- Also: BofA/Merrill's Vivek Arya is out with a bullish note: He thinks 2018 EPS of $8.40 is possible, with 10%-47% upside via cost synergies, lower interest expenses (as Freescale's high-interest debt gets refinanced), lower taxes, and potential buybacks as the company deleverages.
- Arya observes Chinese regulatory approval remains a hurdle, and that NXP/Freescale's combined 90%+ base station power amplifier share is a concern, but also notes NXP plans to divest its base station amplifier ops, and has plenty of Chinese experience (previous).
- Both NXP and Freescale have surged to new highs.
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.
Mon, Mar. 2, 2:52 PM
- Freescale (NYSE:FSL), fresh off announcing a deal to merge with NXP, has unveiled the S32V, an automotive SoC/vision processor said to provide "the requisite reliability, safety and security measures to automate and co-pilot a self-aware car."
- The S32V contains a bevy of high-reliability features, as well as private CogniVue's image-processing tech and support for radar, LIDAR, ultrasonic info, and other data streams. It becomes available in July.
- Mobileye (NYSE:MBLY), whose driver-assistance systems rely on the company's proprietary EyeQ SoC, has sold off in response. Wells Fargo is defending the company, arguing competing in the driver-assistance tech market is easier said than done.
- Shares have added to the losses seen after a Q4 beat and solid Q1/2015 guidance were provided last week, and are less than $2.50 above a post-IPO low of $31.11.
Mon, Mar. 2, 9:15 AM
Sun, Mar. 1, 9:56 PM
- Shortly after Reuters reported a deal was close, NXP (NASDAQ:NXPI) has announced it's buying Freescale (NYSE:FSL) for $6.25/share in cash and 0.35 NXP shares for each Freescale share owned.
- Based on NXP's Friday's close, the deal has a value of $36.14/share, nearly even with Freescale's Friday close. It has an equity value of $11.8B, and an enterprise value of $16.7B after factoring Freescale's net debt.
- Freescale shareholders will own 32% of the post-merger company. NXP will pay for the deal with $1B in cash on hand, $1B in new debt, and 115M shares. It's expected to close in 2H15.
- The companies predict $200M/year in cost savings in the first year after closing, and $500M/year eventually. They assert the post-merger company will be "the market leader in automotive semiconductor solutions and the market leader in general-purpose microcontroller (MCU) products." NXP promises the acquisition will be accretive to both EPS and free cash flow.
Sun, Mar. 1, 7:45 PM
- NXP (NASDAQ:NXPI) is close to buying fellow microcontroller vendor Freescale (NYSE:FSL) for a slight premium to Freescale's current ($11.1B) market cap, two sources tell Reuters. The deal would be the biggest in the chip industry's 18-month-long consolidation wave, creating a company with a ~$32B valuation (~$40B after debt) and expected 2015 sales of $12.2B.
- Two weeks ago, Freescale's shares jumper on reports it's exploring a sale; they've more than doubled from their October lows. In addition to making NXP a top player in the fragmented microcontroller market, acquiring Freescale would give NXP sizable network processor, analog/sensor IC, and RF power amplifier businesses.
- Freescale's network processor and amplifier ops have strong 4G base station exposure, while its microcontroller business depends heavily on auto and industrial sales. The company has relatively little consumer hardware exposure.
- Freescale currently trades for 17x 2015E EPS, and is expected by the Street to post 5% 2015 revenue growth. NXP trades for 15x 2015E EPS, and is expected to post 11% revenue growth. If recent deals are any sign, the companies will argue a merger can deliver major cost synergies.
- Update: NXP and Freescale have officially announced the deal.
Tue, Feb. 17, 11:40 AM
- With shares having more than doubled from their October lows, RBC has downgraded Freescale (FSL -2%) to Sector Perform, while keeping its $33 target intact.
- The network processor/microcontroller maker is still up 6% from where it traded before reports emerged on Thursday night stating the company is exploring a sale, as the chip industry's consolidation wave continues at a frenetic pace.
Fri, Feb. 13, 9:15 AM
Fri, Feb. 13, 3:28 AM
- Freescale Semiconductor (NYSE:FSL) has hired investment bankers to explore a possible sale, the NY Post reported, citing a source close to the situation.
- The company went public in 2011 after being taken private in 2006 for $17.6B.
- Freescale's shares have soared over 75% in the last three months, with much of the rise coming after its strong Q4 results.
Wed, Jan. 28, 12:44 PM
Wed, Jan. 28, 9:14 AM
Tue, Jan. 27, 5:35 PM
Tue, Jan. 27, 5:20 PM
- In addition to beating Q4 EPS estimates (while posting in-line revenue), Freescale (NYSE:FSL) is guiding for Q1 revenue of $1.135B-$1.185B, above a $1.11B consensus.
- Driving the EPS beat: Q4 gross margin was 47.2%, up 90 bps Q/Q and 330 bps Y/Y, and soundly beating guidance for a 75-100 bps Q/Q drop. GM is expected to be roughly flat Q/Q in Q1.
- RF chip sales (lifted by Chinese 4G base station demand) were a standout in Q4, rising 71% to $164M. Microcontroller sales +5% Y/Y to $232M. Digital networking -11% to $217M (carrier and industrial weakness). Automotive MCUs +1% to $271M. Analog/sensors +2% to $193M.
- Operating expenses rose 4% to $327M. $74M was spent on capex in Q4, and $249M over the whole of 2014.
- Shares have risen to $29.50 AH, making new 52-week highs along the way.
- Q4 results, PR
Tue, Jan. 27, 4:07 PM
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