Shares of Microchip Technology (MCHP) - Get Report and NXP Semiconductors (NXPI) - Get Report were lower after Mizuho Securities analysts urged investors to be defensive when assessing the chip sector.
NXP, Eindhoven, Netherlands, and Microchip Tech, Chandler, Ariz., were downgraded to neutral from buy.
Mizuho also cut its price targets, on Microchip Technology to $160 from $165 and NXPI to $220 from $225.
Analyst Vijay Rakesh says investors must "be more defensive and selective" with semiconductor companies amid the global chip shortage stemming from supply-chain issues.
Year-over-year comparisons for chipmakers that focus on automotive and industrial products "start to get tougher with growth slowing in China, and the insatiable order growth starting to stabilize," Rakesh said.
Shares of Microchip Tech at last check were off 2.9% at $139.46 while NXPI dropped 3.4% to $196.61.
Taiwan Semiconductor (TSM) - Get Report on Thursday said it expected sales to rise more than 20% in 2021, affirming its crucial role in helping alleviate a global chip shortage that’s slammed production of everything from cars and trucks to dishwashers and toys.
Taiwan Semi Chief Executive C.C. Wei said the company expected semiconductor supply to remain tight into 2022, though it will ramp up production of microcontrollers by close to 60%.