The semiconductor industry is in a downward trend since mid-2012. Both US- and Europe-based chipmakers are seeing low demand of their products. Texas Instruments share were down on Wednesday, so were Infineon and Linear Technology.
The second largest chipmaker in Europe, Infineon, said in a report that its third quarter results will be down slightly compared to the previous three months and fourth quarter will see a 10 percent low sales compared to ongoing term.
The announcement affected Texas Instruments badly, who was down 2 percent in the stock market on Wednesday after falling three percent the day before. The chipmaker received a negative rating from FBR Capital Markets analyst Craig Berger, who cut his estimate on share price to $25.50 from $28.70. He also pointed to the statement made by Infineon.
“We view this as another data point that broad-based macro and demand trends remain weak, and that broad-based chip firms will see revenue pressures in Q412 as weak demand pull drives customers to reduce year-end inventory levels,” Berger wrote.
Everybody concerned with chip-making industry has his eyes glued to Philadelphia semiconductor index. It was down 1.6% in early trading Wednesday, after falling 2.5% on Tuesday. It has been on downslide since March.
Berger said the only profitable sector in the chip industry is the smartphone business. The likes of iOS- and Android-based devices are making hefty profits and the demand is high.
“We do advise focusing on high quality chip stocks at present like iPhone 5 suppliers, data center plays, or other quality/defensive stocks,” Berger wrote.
Linear Technology and Fairchild Semiconductor were also down on Tuesday and Wednesday. Both fell respectively 2.5 and 2.3 percent on Tuesday and 1 percent and 2.3 percent on the following day.