Tag Archives: wdc

Apple Chip Suppliers Broadcom, NXP, Skyworks Up On iPhone 7 Hopes

Apple ( AAPL ) chip suppliers Skyworks Solutions ( SWKS ), Cirrus Logic ( CRUS ) and Qorvo ( QRVO ) stocks lifted Monday on a bullish RBC Capital report that sees fellow chipmaker Broadcom ( AVGO ) reaching $16 earnings per share on merger synergies and iPhone 7 content gains. But Broadcom’s Q2 wireless sales will likely dip $40 million to $50 million on slowing current-generation iPhone sales, RBC Capital analyst Amit Daryanani wrote in the research report. He rates Broadcom stock his top semiconductor pick, with a 180 price target. Over the next two years, Broadcom stock could reach 200, Daryanani says. In afternoon trading on the stock market today , Broadcom stock was up a fraction, trailing shares of InvenSense ( INVN ) and Qorvo, which jumped 3.4% and 3.3%, respectively. Cirrus Logic, Skyworks and Taiwan Semiconductor Manufacturing ( TSM ) stocks were up 3, 2.5% and 1.5%, respectively. NXP Semiconductors ( NXPI ) stock was up nearly 1.5%, while  Integrated Device Technology ( IDTI ) was up a fraction. Broadcom is slated to report its Q2 earnings after the close June 2. Daryanani expects Broadcom to miss consensus expectations for $3.55 billion in sales on petering Apple iPhone sales, despite stronger-than-expected Samsung Galaxy S7 sales. Apple comprises 15% of Broadcom’s sales, Daryanani estimates, with Samsung in the high single digits. Apple’s June-quarter guidance implies 40 million iPhones shipped vs. consensus views for 44 million. Near term, Apple will pose a headwind until the iPhone 7 , expected to be released in September, ramps up. “To that end, Broadcom’s FBAR (film bulk acoustic resonator) business could see double-digit year-over-year growth driven by content gains,” Daryanani wrote. Wi-Fi combo chips could also see modest average sales prices tailwinds. Earlier, Broadcom saw wireless account for 23% of sales. Daryanani expects that segment to grow 37% quarter over quarter as the company’s recent merger is factored. The former Avago Technologies bought Broadcom for $37 million in February, but kept the Broadcom name. Storage sales will likely become “incrementally worse,” Daryanani wrote. Western Digital ( WDC ) and Seagate Technologies ‘ ( STX ) recent earnings suggest a $100 million hard-disk drive total addressable market in March and a $95 million TAM in June, down 20% and 15% vs. last year. Enterprise storage is expected to account for 17% of Broadcom’s Q2 sales. Daryanani sees the segment declining 14% vs. Q1, vs. 6% sequential growth in the prior quarter.

With SanDisk Purchase Done, Western Digital Will Give New Guidance

Western Digital ( WDC ) will provide revenue and earnings guidance for the first time since completing its $16 billion acquisition of SanDisk. Western Digital announced the completion of its SanDisk acquisition on Thursday, creating a formidable competitor in both disk drives and flash-chip storage. The company says it will update its guidance on May 26, after the market close, for its fiscal fourth quarter ending July 1. The guidance will reflect the partial period of ownership of SanDisk in Q4. RBC Capital Markets analyst Amit Daryanani, in a research note, said he expects Western Digital to imply Q4 revenue guidance of $3.4 billion. That’s above the consensus estimate of $3.34 billion from analysts polled by Thomson Reuters. The Wall Street consensus on earnings per share minus items is 86 cents. Daryanani expects 93 cents. He has an outperform rating on Western Digital stock and a price target of 56. Western Digital was trading near 39, up 5%, in afternoon trading in the stock market today . But shares are down more than 20% since the company’s posted fiscal Q3 earnings on April 28. Western Digital and SanDisk had combined revenue of about $20 billion in 2015. Western Digital is the largest provider of disk drives, ahead of Seagate Technology ( STX ). Seagate was trading near 20, up 4%, Wednesday afternoon. The stock is down 24% since the company reported its fiscal Q3 earnings on April 29. SanDisk is a leading provider of chips used for data storage in a wide variety of devices, including smartphones, tablets and PCs. The deal will help SanDisk, which has a strong retail business, move up the ladder to make bigger sales to businesses and other enterprise customers — the market where Western Digital is strongest. Western Digital gets the ability to offer chip-based storage in areas where its disk drive technology is losing ground.

Federal Dig Snags Lam’s KLA Buy; Will China Cry Antitrust?

Chinese, Japanese and South Korean regulators could gum up Lam Research ‘s ( LRCX ) attempt to buy KLA-Tencor ( KLAC ) by following in the footsteps of the U.S. Department of Justice, which is asking for more information on the proposed merger, an analyst said Monday. Late Friday, the companies said the DOJ had sent a “second request,” digging deeper into Lam Research’s $10.6 billion plan to acquire KLA-Tencor. Only 2%-4% of merger proposals get a second request, Semiconductor Advisors president Robert Maire says. Of those, he says about a third go through as planned but the other two-thirds either get challenged by the DOJ or get a consent decree, which is approval with conditions. In the Lam-KLA deal, the likely concerns revolve around antitrust. Together, the companies would be close to matching the market cap of  Applied Materials ( AMAT ), which is No. 2 among makers of chip manufacturing equipment, behind ASML ( ASML ). Also, together they could pressure etch pricing for major players like Intel ( INTC ) and Taiwan Semiconductor Manufacturing ( TSM ), the latter an Apple ( AAPL ) supplier. Tokyo Electron and Hitachi ( HTHIY ), which compete against Lam in etch, might oppose having KLA continuing to inspect their tools and processes. “While not good news, a second request is certainly not a death sentence for the merger, but at the very least (it) means more time and money and scrutiny to get approval,” Maire wrote in a research note. The 30-day clock for DOJ approval has now been reset. ‘Kitchen Sink Of Information’ In midday trading on the stock market today , Lam Research and KLA-Tencor stocks were down nearly 2% and 1.4%, respectively, both near three-month lows. IBD’s 34-company Electronic Semiconductor-Equipment industry group was down a small fraction midday Monday. Maire says the DOJ could “ask for the kitchen sink of information.” “The (second request) is not just a simple test of overlapping product lines,” he wrote. “It looks at things like market concentration and anti-competitive issues. (Lam-KLA) would certainly have a large concentration of the overall market.” The chip industry is most concerned about KLA’s standing as an “impartial arbiter” of others’ tools, he says. “Will Lam dep and etch tools get an unfair advantage? An early look at results? A more complete look?” Maire asked. “(It’s) kind of a lot like insider trading.” Lam and KLA already have the go-ahead from Germany, Ireland, Israel and Taiwan, but they still needs a slew of other foreign approvals. This DOJ action can “snowball into a problem” if it becomes too costly, Maire says. Applied Materials and Tokyo Electron called off their merger in the face of strong regulator scrutiny. DRAM Slowdown Hits Lam The request further delays the merger’s close, Needham analyst Y. Edwin Mok noted in a research report, saying he expects the deal to close in Q4, as opposed to the companies’ target for Q3. Western Digital ( WDC ) closed its $19 billion SanDisk acquisition last week, a merger that was announced within hours of the Lam-KLA match-up. Neither Mok nor Cowen analyst Timothy Arcuri worry about the Lam-KLA deal getting approval, however. In his report, Arcuri called the second request “more procedural in nature.” “There is no overlap here, and certain big customers have been pushing these companies together for several years, especially around the issue of yield ramp in 3D,” he wrote. “We continue to see the deal closing in (the) August time frame.” Arcuri cut his price target on Lam stock to 85 from 93. Lam and rival ASML recently indicated minor timing delays for DRAM (dynamic random-access memory)-related shipments, he wrote. Lam has guided shipments up for the second half of the year, but Arcuri isn’t that confident. “Weakness for Lam seems focused on the memory side, with some signs of a less aggressive 3D Nand (flash) shipment cadence to Toshiba, seemingly due more to capital constraints at this customer rather than any fundamental change in the 3D Nand ramp itself,” he wrote. But Samsung, SK Hynix, Micron ( MU ) and Intel Dalian haven’t experienced any mirrored slowdown, he wrote.