Shares in specialist radio frequency chipmakers Skyworks Solutions Inc and RF Micro Devices Inc regained lost ground on Friday as analysts debated the significance of looming competition from cellphone chipmaker Qualcomm Inc.
Skyworks shares rose 5 percent and RFMD shares 4 percent, recouping some of the losses suffered on Thursday after Qualcomm unveiled plans for its own radio frequency (RF) chip.
Qualcomm's low-power radio chipset, dubbed RF360, promises to work across various bands, raising concerns that the entry of a mobile chip heavyweight would limit growth of the radio chipmakers.
Lazard Capital Markets analysts said on Friday they would be surprised if Qualcomm would risk damaging integrated circuit partnerships to seek a maximum operating income opportunity of about $400 million to $600 million.
"We believe QCOM's front-end RF360 solution is largely a 'proof of concept' to pressure the industry to solve 'band fragmentation' vs a dominant solution that could threaten RFMD," Lazard analysts wrote in a note.
The brokerage upgraded RF Micro's stock to "buy" from "neutral."
However, analysts at Raymond James downgraded their ratings on both RF Micro and Skyworks stocks by a notch on Thursday.
"Qualcomm's entry into new markets tends to be a bit underwhelming in the first 1-2 years, but almost universally successful in the longer term, sometimes through acquisition," Raymond James analysts said.
San Diego-based Qualcomm is benefiting from strong demand for smartphones and a move by network operators around the world to a high-speed wireless technology known as long-term evolution (LTE), where the company is ahead of its rivals.
Countries deploy LTE with various bands of radio spectrum leading to band fragmentation. There are about 40 cellular radio bands worldwide and that poses a challenge for manufacturers looking at which bands to support in their devices.
RF Micro shares were up 3 percent at $4.75, while Skyworks shares 2 percent at $21.76 on the Nasdaq.
Qualcomm shares were trading flat.
Shares in IQE Plc fell as much as 19 percent on Friday on the London Stock Exchange as Qualcomm's radio frequency front-end chip could pose a threat to its compound semiconductors.
(Reporting by Supantha Mukherjee in Bangalore; Editing by Sriraj Kalluvila)