In a note released on Tuesday, RBC Capital Markets downgraded the semiconductor sector to "market weight" from "overweight." The factors include uncertainty about the economy, lack of improvement in PC orders (which make up 40% of semiconductor revenue), weak growth in communications equipment, and softness in both China and Europe.
"Order rates are beginning to decelerate across multiple end-markets as macro concerns continue to weigh on the overall mood, while a lack of inventory investment could pose near-term revenue risks," RBC Capital's Doug Freedman said in the note.
RBC lowered its semiconductor sales outlook for 2012 and 2013, to $297.2 billion and $312.2 billion, respectively, from $301.2 billion and $314.5 billion.Set against this backdrop, RBC downgraded Intel (INTC), Texas Instruments (TXN), Analog Devices (ADI) and Nvidia (NVDA) to "sector perform" from "outperform," pointing to "visible headwinds" in the next three to six months. The firm, however, upgraded Broadcom (BRCM) to "outperform" from "sector perform." "It is prudent to rotate into wireless-communications names exposed to winning platforms (Broadcom, Peregrine Semiconductor (PSMI), SanDisk (SNDK)), while reducing exposure to the PC ecosystem (Intel, Nvidia, Marvell (MRVL)) given our reduced demand forecast," Freedman said. Touted as a potential component supplier to Apple's (AAPL) new iPhone 5, Broadcom is well-positioned to capture growth in the mobile market. The Irvine, Calif.-based firm, for example, has three components in the newest version of the iPad launched earlier this year. Apple, according to Freedman, could account for up to 15% of Broadcom's total revenue in 2012, up from 13% in 2011. UBS recently raised its Broadcom estimates through 2012 on lower operating expenses. Canaccord Genuity also has a "buy" rating on the chip maker. Broadcom may make strides in baseband, with Apple and other tablet makers, Canaccord analyst Bobby Burleson said in a recent note. Baseband chips, such the Broadcom BCM4330 in the new iPad, provide radio transmitter and receiver functions for wireless devices. Broadcom shares, which have gained almost 25% this year, closed up 2.3% at $36.92 on Tuesday. Intel, in an attempt to shake off the effects of a weak PC market, is also ramping up its efforts in other, potentially more lucrative, areas. Last week, at the company's annual Developer Forum, the No. 1 chip maker laid out its vision for the next generation of computing devices, touting new touch- and voice-based technologies, and gave a preview of a next-generation processor code-named Haswell. David Perlmutter, Intel's chief product officer, said the chip will offer double the performance of its predecessor, Ivy Bridge. The 22-nanometer processor, which is coming to market next year, will play a key role in tablets and so-called ultrabooks, a new breed of skinny laptops that Intel is championing. Intel is also increasing its efforts in the smartphone market. On Tuesday, the tech giant announced that Motorola's RAZR i phone will be powered by its processor technology when it launches in parts of Europe and Latin America next month. The RAZR i represents Intel's sixth smartphone deal, following similar partnerships with MegaFon in Russia and ZTE in China. The Santa Clara, Calif.-based firm recently lowered its third-quarter outlook, citing the effects of a tough economic environment. Intel shares ended Tuesday up 0.3% at $23.37. --Written by James Rogers in New York. Follow @jamesjrogers >To submit a news tip, send an email to: email@example.com. Check out our new tech blog, Tech Trends. Follow TheStreet Tech on your wireless devices
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV