Chip stocks soar on TI deal

By David Goldman, staff writer


NEW YORK (CNNMoney) -- Shares of chipmaking companies soared on Tuesday following Texas Instruments' late Monday $6.5 billion bid for rival National Semiconductor.

Both companies make analog chips, which are used to help computers sense the world around them.

National Semiconductor (NSM) led the pack, gaining more than 70% in early trading, but other analog chipmakers also rose significantly: Intersil (ISIL) climbed 13%, ON Semiconductor (ONNN) rose 5%, and Fairchild Semiconductor (FCS) gained 3%

Shares of Analog Devices (ADI), Linear Technology (LLTC), Maxim Integrated Products (MXIM),International Rectifier (IRF) all rose about 1%.

The deal would give Texas Instruments (TXN, Fortune 500), already the world's largest analog chipmaker, an even more sizable lead over its competition. The combined company would control 18% of the market, with the next largest rivals holding a 4% to 6% share.

As a result, analysts anticipate more deals in that segment of the chip market

"We do believe that more consolidation is possible in the analog space given the fragmented and diffuse nature of that market, and given that TI is so much larger than its next few competitors," said Craig Berger, analyst at FBR Capital Markets.

TI could buy up more analog chipmakers, or smaller competitors could merge for scale and efficiencies, analysts say. Shares of TI fell more than 2%.

Berger sees Fairchild Semiconductor and International Rectifier as the most attractive takeover targets. Both have high exposure to the industrial and automotive sectors, and their share prices are relatively cheap compared to their earnings expectations.

Even Intel (INTC, Fortune 500), AMD (AMD, Fortune 500), and Nvidia (NVDA), which have all suffered through recent slumps and aren't players in the analog business, were up about 1% on Tuesday.

Chip stocks got knocked around in the past two days, after IHS iSuppli reported that semiconductor suppliers' string of six consecutive quarters of sequential sales growth ended in the fourth quarter of 2010. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,880.36 -31.75 -0.19%
Nasdaq 4,462.90 20.20 0.45%
S&P 500 1,970.07 0.12 0.01%
Treasuries 2.55 0.09 3.74%
Data as of 5:47pm ET
Company Price Change % Change
Bank of America Corp... 15.58 0.24 1.56%
Genworth Financial I... 13.98 -2.28 -14.02%
Facebook Inc 74.68 0.97 1.31%
Pfizer Inc 29.26 -0.21 -0.71%
Apple Inc 98.15 -0.23 -0.23%
Data as of 4:01pm ET

Sections

The case involves bad mortgages sold by Countrywide Financial ahead of the Great Recession and its multi-billion dollar rescue by Bank of America. More

The case involves bad mortgages sold by Countrywide Financial ahead of the Great Recession and its multi-billion dollar rescue by Bank of America. More

Restrictive immigration policies prevent talented entrepreneurs from launching businesses in the U.S. So, they're moving to Canada. More

From "grandparent scams" to fraudulent investments, schemes targeting the elderly are by far the worst, according to an annual survey from the Consumer Federation of America. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.