Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of camera chip specialist OmniVision Technologies (Nasdaq: OVTI) hit the skids this morning, falling as much as 11.6% on tremendous volume before making a partial recovery.

So what: Analyst firm Robert W. Baird downgraded OmniVision from "buy" to "hold" this morning, citing the high likelihood that Apple (Nasdaq: AAPL) might seek a second supplier of camera chips for the coming iPhone 5. Sony (NYSE: SNE) seems poised to steal at least a share of that attractive contract from OmniVision.

Now what: The high-quality backside illumination (BSI) chips Apple requires for its phones are a point of pride and technical superiority for OmniVision, though Sony is supposedly increasing its investment in BSI technology as well. I can't agree with Baird's conclusion that chip foundries might price OmniVision out of the iPhone opportunity; the foundries know full well that the end customer is Apple, which feeds demand for lots of the chips they manufacture for various semiconductor designers. If Sony makes it into the iPhone, I'd expect it to happen in 2012 when the company gets its BSI act together. This is still OmniVision's time to shine.

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