Piper Jaffray Reports On Strength Of Semiconductors and Enabling Tech

Piper Jaffray, in light of 1Q results, claims that demand among semiconductors and enabling technology is not as strong as it seems.

In the report, Piper Jaffray writes, “Demand is not as strong as it appears. Fear of supply disruptions is driving double ordering of components and finished products throughout the supply chain. Moreover, strong demand in Q1 was driven by iPhone channel fill, Chinese New Year and PC channel fill. The Q1 exception was communication infrastructure that is starting to recover from an inventory correction. We do not believe non-Apple tablets are gaining traction, and demand for them is weaker than expected. We are seeing delayed ramps of key new phones. Based on these factors, we believe demand will slow and there will be an inventory overshoot in 2H, likely Q3. So far the correction looks transitory, but there may be a mid-cycle pause in 2012. At this point our thesis is unchanged and would wait for pullbacks to add to positions.”

The report also highlights three favorite names in the long term: Altera Corp. (NASDAQ: ALTR), Qualcomm Inc. (NASDAQ: QCOM) and NetLogics Microsystems (NASDAQ: NETL).

ALTR, QCOM and NETL closed at $45.99, $56.94 and $41.91 respectively last Thursday.