A raft of semiconductor stocks fell this week after reporting in-line or better results for the September quarter but guiding well short of views for the December quarter. Many of those companies cited a slowdown in industrial chip sales.
Chipmakers impacted by the industrial slowdown include Allegro MicroSystems, Lattice Semiconductor, Microchip Technology, ON Semiconductor and Silicon Labs.
Analog, industrial and automotive chipmakers "could not sound worse" this earnings season, Jordan Klein, managing director for tech, media and telecom sector trading at Mizuho Securities, said in a client note. Those stocks are "being sold hard on a wave of guide downs," he said.
"I just don't see any real buyers of auto and industrial semis near term even if the estimates for next year all get reset much lower," Klein said. Those markets could weaken further, he said.
Semiconductor Stocks: Microchip Guides Down
Late Thursday, Microchip became the latest industrial chip supplier to guide lower. The control-chip maker matched earnings estimates on softer-than-predicted sales for its fiscal second quarter ended Sept. 30. It also provided an outlook that was meaningfully below consensus.
Microchip earned an adjusted $1.62 a share, up 11% year over year, on sales of $2.254 billion, up 9%, in the September quarter. Analysts were looking for sales of $2.265 billion in the period.
For the December quarter, Microchip predicted earnings of $1.13 a share, down 28%, on sales of $1.86 billion, down 14%. Analysts had planned for earnings of $1.44 a share on sales of $2.11 billion.
IPhone, AI Business Boosts Some Chip Stocks
Elsewhere among semiconductor stocks, companies that supply chips for Apple fared better.
Several chipmakers posted beat-and-raise reports this week thanks to healthy iPhone 15 chip sales. They included Cirrus Logic, Qorvo and Qualcomm.
Meanwhile, Advanced Micro Devices excited investors with a robust sales forecast for its data-center accelerator product for artificial intelligence applications, the MI300. That product will compete with AI offerings from industry leader Nvidia.
The Philadelphia semiconductor index, known as SOX, rose 2.6% on Friday. Year to date, the SOX is up 36.4%. The Philadelphia semiconductor index includes the 30 largest semiconductor stocks traded in the U.S.
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