Overweight Semiconductors

Piper Jaffray released its industry note today on semiconductors and highlighted some of the manufacturers they track. Altera (

) is rated Overweight. Our $48 price target is based on 18x CY11E EPS. Risks for Altera include: 1) reliance on foundries for wafer production, 2) competition 3) fluctuations in end demand, 4) and cyclicality. ASML Holding (

) is rated Overweight. Our $49 price target is based on 13x 2011 EPS of $3.80. Risks for ASML include industry cyclicality, reliance on a few key suppliers, and customer concentration. The risk to ASML is the use of maskless lithography such as imprint lithography or e-beam lithography below 16nm. The lithography road map challenges are looming on the horizon and could have negative consequences for the share in the 2013 to 2015 time frame Atheros (

) is rated Overweight. Our $38 price target is based on 18x CY11E EPS. Risks for Atheros include: Speed of transition to 802.11n technology, PC industry unit demand, and timing of ramp of embedded 802.11 design wins. Nanometrics (

) is rated Overweight. Our $24.50 price target is based on 12x CY11E EPS. Risks for Nanometrics include, but are not limited to: 1) industry cyclically, 2) customer and memory market concentration, and 3) expected share gains. Silicon Labs (

) is rated Overweight. Our $46 price target is based on 21x CY 2011E EPS of $2.20. Risks for Silicon Labs include: FM tuner market share declines and slower-than-expected ramp of design wins.