Citi Just Reiterated On Intel, Altera and Xilinx...But Why?

In a report published Monday, Citi analysts maintained a Neutral rating on Altera Corp. (NASDAQ: ALTR), Intel Corporation (NASDAQ: INTC) and Xilinx Inc. (NASDAQ: XLNX). The analysts commented that the delays for Altera posed as bad news for Altera, Intel and Xilinx. In the report, Citi noted, "Our checks indicate Altera's 14nm tapeout at Intel has been pushed out again from 2Q15 to 2H15. Our checks also indicate Altera has been very aggressive in pricing to gain back share in Asia." These 2 news were seen as negative for all three companies and positive for Taiwan Semiconductor Manufacturing Co Ltd (NYSE: TSM) and Samsung (OTCMKTS: SSNLF), both of which are rated as Buy by the analysts. "We believe the additional setback could put Intel's foundry effort "back to the drawing board" due to the extensive delays scaring away potential customers. We do not expect the delay to have much impact on Altera, as the company was already behind Xilinx at the current 28nm node, so we don't view much incremental share loss at 14nm node," the analysts explained.Citi said, however, that Altera's aggressive pricing to regain market share in Asia was the "cause of Altera's unexpected gross margin decline to 65% in 4Q14, while adding that Xilinx could lose market share as "it does not appear to be price matching".