Cautious forecast for chip makers
By Tenzin Pema |
November 20, 2009, Friday
|
Print Edition
Print Edition
BOFA Merrill Lynch lowered its 2010 growth forecast for the global semiconductor industry and downgraded 10 chip makers, including Intel Corp, becoming more cautious on expectations of a modest overshoot in global supply chain inventories.
"While we believe the correction will likely prove short and shallow, we think any hint of a correction in the supply chain could punish stocks," BofA Merrill told clients.
The brokerage downgraded Intel, the world's largest chip maker, to "neutral" from "buy," and made similar changes to rivals LSI Corp, Marvell Technology Group Ltd, Texas Instruments Inc and Dutch chip equipment maker ASML Holding NV.
BofA Merrill, which cut its 2010 growth estimate for the sector to 18 percent from 21 percent, also downgraded Microchip Technology Inc, Maxim Integrated Products Inc, National Semiconductor Corp, Power Integrations Inc and Britain's ARM Holdings Plc to "underperform."
After a period of rapid replenishment of inventory as well as normalization of semiconductor shipments to "true" consumption levels, inventories in the supply chain are approaching a level that suggests a modest overshoot versus equilibrium levels, the brokerage said.
"While we believe the correction will likely prove short and shallow, we think any hint of a correction in the supply chain could punish stocks," BofA Merrill told clients.
The brokerage downgraded Intel, the world's largest chip maker, to "neutral" from "buy," and made similar changes to rivals LSI Corp, Marvell Technology Group Ltd, Texas Instruments Inc and Dutch chip equipment maker ASML Holding NV.
BofA Merrill, which cut its 2010 growth estimate for the sector to 18 percent from 21 percent, also downgraded Microchip Technology Inc, Maxim Integrated Products Inc, National Semiconductor Corp, Power Integrations Inc and Britain's ARM Holdings Plc to "underperform."
After a period of rapid replenishment of inventory as well as normalization of semiconductor shipments to "true" consumption levels, inventories in the supply chain are approaching a level that suggests a modest overshoot versus equilibrium levels, the brokerage said.
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