Semiconductor players remain the most optimistic wireless sector, even if the stock profiles do not reflect the upbeat mood.
Yet according to a new study, the shares are poised to grow. Standards & Poor’s Equity Research said semiconductor stocks have the potential to appreciate between 20 to 25 percent during the next 12 months.
And chipmakers are unveiling new products and contracts. Texas Instruments introduced what it describes as a complete EDGE smart-phone chipset and reference design.
Agere Systems Inc. has announced two contracts to deliver radio-frequency transistors to two companies. First, it announced a deal with Sewon Teletech and later with NEC Corp. The amplifiers are a base station component.
The Standards & Poor’s Equity Research Services report identifies surging demand in Asia, improving corporate profits in the United States, under-investment in semiconductor manufacturing capacity, high operating leverage of the companies and pricing power as reasons for the anticipated share rise.
The authors of the study include Massimo Santicchia; Thomas Smith, CFA; and Richard Tortoriello, who are leading analysts with Standards and Poor’s.
“Chipmakers do face a number of challenges, however,” said the report, “including rapidly rising semiconductor design costs; the rise of consumer electronics, whose chips carry lower margins; and extremely high price tags ($2 billion to $4 billion) for new manufacturing facilities.”
Some major players, including Intel Corp., Microchip Technology and TI, have received “buy” rankings from S&P.
TI’s product, known as the TCS3500 chipset, will enable EDGE applications, such as multimedia, gaming, camera functionality and video. It supports all leading operating systems, including Symbian, Microsoft Windows, Linux and PalmSource, as well as Nokia’s Series 60, according to Tom Pollard, worldwide marketing director for TI’s chipset unit.
He said it is anchored on the company’s applications processor, the OMAP850.
“By leveraging the proven success of predecessor OMAP730-based GSM/GPRS reference designs, we are able to offer our customers a complete smart-phone reference design highly integrated with all the components required to build full-featured handsets based on the EDGE standard,” said Rick Kornfeld, vice president and general manager of TI’s wireless chipset business.
Agere said its transistor enables base-station amplifiers to “remain cooler, thereby simplifying product design and improving its reliability.”
“The use of Agere transistors in our base stations will accelerate our company’s 3G wireless equipment deployment during the next few years,” said Nobuhiro Endo, general manager of NEC’s mobile and wireless division.
