Analyst: China Weakness Offsetting iPhone, Galaxy Demand

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Chipmakers whose products are used in mobile computing are seeing strong demand related to the iPhone and Galaxy lines offset by sluggish phone sales in China, an analyst said Thursday. But it's steady as she goes for Pacific Crest's John Vinh, who maintained ratings on eleven companies in the sector. Ahead of upcoming first-quarter earnings, Vinh is overweight on five of those companies: ARM Holdings plc
ARMH
, Avago Technologies Ltd.
AVGO
, Maxim Integrated Products Inc.
MXIM
NXP Semiconductors NV
NXPI
and Skyworks Solutions Inc.
SWKS
. Separately, in a look at a broader slice of the chip market, Morgan Stanley's Joseph Moore forecast a tick-down in demand for micro-controller units and connectors, while the market for analog chips will remain stable. "We're selectively bullish on several stocks" in the sector, Moore said in a market survey report Thursday. Moore is "constructive" on Avago Technologies Ltd., Fairchild Semiconductor International Inc.
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FCS
, TE Connectivity Ltd.
TEL
and Maxim Integrated Products Inc. Moore didn't publish ratings on the companies in his market survey. Regarding mobile chips, component orders related to the Chinese smartphone market will continue soft in the second quarter, Vinh said, growing at between 5 percent and 10 percent, versus "normal seasonal demand" growth of 20 percent, according to Vinh. First-quarter demand related iPhones were up between 15 percent an 20 percent, but growth is likely to fall to between zero and five percent in the second quarter, Vinh said. Samsung has been boosting its shipment targets for its Galaxy S6 phone and Vinh expects units could top 46 million for the year, up 22 percent from S5 sales of 2014.
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