Chip stocks climb, helped by jump in December revenue, upbeat talk from analysts

Sector Snap: Chip stocks climb on Dec. sales

NEW YORK — Shares of chip makers advanced Monday, helped by a report indicating their revenue jumped in December and growing analyst confidence that the companies are in a strong position for the year.

Chip stocks generally fell last month, with investors jittery about the broader economic outlook and fourth-quarter earnings reports. The Philadelphia Semiconductor index was down 12 percent in January.

But in midday trading Monday, the index was up 6.96 points, or about 2 percent. Earlier in the day, the Semiconductor Industry Association said December global chip revenue climbed 29 percent compared with the same month of 2008.

In a note to investors Monday, FBR Capital Markets analyst Craig Berger said he expects several chip companies he covers to beat Wall Street’s fourth-quarter estimates. Additionally, he said inventories among customers such as computer makers are still thin, meaning they will have to ramp up orders to keep pace with any improvement in consumer demand.

Berger added that the recent selling of chip shares could offer a buying opportunity. He reiterated an “Outperform” rating on shares of International Rectifier Corp., Silicon Laboratories Inc., On Semiconductor Corp. and Broadcom Corp.

International Rectifier climbed 97 cents, or 5.4 percent, to $19.01 in midday trading, while Silicon Laboratories was up $1.35, or 3.2 percent, to $43.59. On Semiconductor was up 34 cents, or 4.7 percent, at $7.55 and Broadcom rose 79 cents, or 3 percent, to $27.51.

Meanwhile, Broadpoint AmTech analyst Doug Freedman sent a note to clients Monday arguing chip stocks have room to go higher. He upgraded the sector to “Overweight” from “Neutral.”

Freedman said the sector’s recovery should be “sustainable and gradual, as the industry is targeting sustained profitability, not unreasonable growth forecasts.”