Chipmakers For Consumer Devices See Slowing Sales Ahead

Chipmakers exposed to personal computers, consumer electronics and Android smartphones have noted weakening demand in their second-quarter earnings reports. Meanwhile, other semiconductor stocks have posted beat-and-raise reports on the strength of enterprise computing, industrial and automotive chip demand.




X



In the past week, Advanced Micro Devices (AMD), Power Integrations (POWI), Qorvo (QRVO), SiTime (SITM), Skyworks Solutions (SWKS) and Synaptics (SYNA) lowered their revenue outlooks for the third and fourth quarters based on softening consumer device sales.

And last week, Intel (INTC) and Qualcomm (QCOM) cut their guidance for the same reason.

Slowing sales of personal computers and Android smartphones were well understood heading into the second-quarter earnings season. However, continued strong sales of Apple (AAPL) iPhones helped to offset the slowdown for chipmakers such as Skyworks and Cirrus Logic (CRUS).

Qorvo Hit By Weak Chinese Smartphone Sales

Wireless-chip maker Qorvo has been hurt by declining sales of Chinese Android smartphones, including those from Oppo, Vivo and Xiaomi.

Qorvo faces a “massive headwind” as Chinese smartphone makers work down large inventories of components, Needham semiconductor stocks analyst Rajvindra Gill said in a note to clients.

“They now expect December to be the bottom for the Android market following aggressive inventory burns,” Gill said. The weakness is in the low and midrange Android handsets, not the premium devices, he said.

Some Semiconductor Stocks Doing Well

Chipmakers with greater exposure to cloud computing, industrial and automotive chip markets have outperformed this earnings season. Semiconductor stocks in that camp included Lattice Semiconductor (LSCC), Microchip Technology (MCHP), Monolithic Power Systems (MPWR) Rambus (RMBS). Those companies have posted beat-and-raise quarterly reports this season.

Semiconductor stocks have perked up lately. IBD’s semiconductor manufacturing group currently ranks No. 76 out of 197 industry groups that IBD tracks. Three months ago, it ranked No. 110.

IBD’s fabless semiconductor industry group ranks No. 94, up from No. 159 three months ago.

Meanwhile, the Philadelphia semiconductor index, known as SOX, is down 23.1% year to date, vs. a drop of 13.3% for the S&P 500. The SOX includes the 30 largest semiconductor stocks traded in the US

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.

YOU MAY ALSO LIKE:

Power Integrations Misses Sales Target, Guides Lower On Smartphone Weakness

SiTime Stock Plummets After Chipmaker Slashes Outlook For Rest Of Year

AMD Stock Falls After Chipmaker’s Light Sales Outlook For Third Quarter

Learn How To Time The Market With IBD’s ETF Market Strategy

Find Today’s Best Growth Stocks To Watch With IBD 50

Leave a Comment

Your email address will not be published.