Shares of semiconductor companies fell Friday as a Citi Investment Research analyst downgraded shares of chip makers SanDisk Corp. and International Rectifier, and Smart Modular Technologies Inc. issued a disappointing outlook.
Shares of memory chip maker SanDisk took the biggest fall on the Philadelphia Semiconductor Sector Index, diving $2.35, or 10 percent, to $21.09 in midday trading. The index lost 10.15, or 2.6 percent, to 384.12 amid a decline in the broader market prompted in part by new worries in the financial sector. All 18 stocks on the index traded lower.
Citi analyst Craig A. Ellis lowered his rating on SanDisk to "Hold" from "Buy" and cut his share price target to $27 from $35 late Thursday.
Over the past year, memory chip makers have struggled with weak pricing because of inventory oversupply. Ellis said SanDisk's second-quarter pricing looks "firm" but that because of weaker demand, an expected tightening of supply is not emerging.
In a separate note, Ellis advised investors to avoid cyclically dependent makers of commodity analog and memory chips, such as SanDisk and International Rectifier. "Following meetings this week in Taiwan and Korea and a cycle framework update we conclude narrower group exposure is appropriate," he wrote.
Ellis downgraded power chip maker International Rectifier to "Sell" from "Hold." Its shares fell $1.49, or 6.3 percent, to $22.04.
Meanwhile, shares of Smart Modular fell to a 52-week low of $4.44. By midday, the stock was down 53 cents, or 10.5 percent, at $4.50. The memory chip maker late Thursday predicted fiscal fourth-quarter income below analyst estimates.
Elsewhere in the chip sector, microprocessor maker Advanced Micro Devices Inc. fell 26 cents, or 3.6 percent, to $7.07, while Infineon Technologies AG slipped 41 cents, or 4 percent, to $9.83.
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