Nvidia And Marvell Are Strong But These Two Chip Stocks Should Be Sold: Citi

Specialty-semiconductor stocks, Skyworks Solutions Inc. SWKS and Qorvo, Inc. QRVO, have been downgraded by Citi analysts following concerns over increased competition from China. However, the stocks of Nvidia Corporation NVDA and Marvell Technology, Inc. MRVL remain rated as Buy.

As reported by Barron’s, Citi analysts have revised their ratings for Skyworks and Qorvo to Sell from Neutral, also reducing their price targets to $87 and $78, respectively, from their previous $116.

The downgrade was triggered by the “increased China substitution risk” following the launch of the Huawei Mate 60 phone, which Citi believes uses domestic radio frequency and connectivity chips. The phone’s main chip, manufactured on a 7-nanometer node, marks a significant advancement in China’s domestic mass-market consumer device semiconductor industry.

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Skyworks and Qorvo’s sales in China have been on the decline for the past year due to weakening smartphone demand. Citi analysts suggest that the rise of Chinese domestic radio frequency component makers could lead to further market share loss and a weak sales recovery in 2024 for these companies.

Despite the downgrade of Skyworks and Qorvo, Citi analysts maintain a positive stance on Nvidia, noting that the launch of the Blackwell B100 GPU in the first half of 2024 could serve as a significant stock catalyst. Marvell also retains its buy rating due to its 800 gigabits per second optical artificial-intelligence opportunity.

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