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.
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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 - Get Report) , Texas Instruments (TXN) , Analog Devices (ADI) and Nvidia (NVDA - Get Report) to "sector perform" from "outperform," pointing to "visible headwinds" in the next three to six months.
The firm, however, upgraded Broadcom (BRCM - Get Report) to "outperform" from "sector perform." "It is prudent to rotate into wireless-communications names exposed to winning platforms (Broadcom, Peregrine Semiconductor (PSMI) , SanDisk (SNDK - Get Report) ), while reducing exposure to the PC ecosystem (Intel, Nvidia, Marvell (MRVL - Get Report) ) given our reduced demand forecast," Freedman said.
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.
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