Spreadtrum Communications Inc. (SPRD), a Chinese mobile-phone chipmaker, tumbled to an eight-month low in New York after Chardan Capital Markets recommended buying shares of competitor RDA Microelectronics Inc. (RDA)
American depositary receipts of Shanghai-based Spreadtrum lost 7.8 percent to $13.67, extending its three-day decline to 19 percent, at the close of trading in New York. It was the lowest close since Aug. 8. Pudong, China-based RDA gained for a third day, adding 2.7 percent to $12.99, a two-month high.
RDA is taking market share away from Spreadtrum as it undercuts its competitor’s pricing, said Jay Srivatsa, the managing director of equity research at Chardan, who initiated coverage of RDA with a buy rating today. Srivatsa has a neutral rating on Spreadtrum.
“RDA is killing their pricing which is a huge negative for Spreadtrum,” Srivatsa said in a phone interview from New York. “The pricing has been coming down quite a bit, and we’re seeing that RDA is becoming a low-cost leader, and that’s driving Spreadtrum’s margins down.”
Spreadtrum also declined after Intel Corp. (INTC), the world’s largest semiconductor maker, forecast second-quarter gross margin that was lower than some analysts predicted, said JMP Securities analyst Alex Gauna in a phone interview from San Francisco.
Intel slipped 1.8 percent to $27.95.
To contact the reporter on this story: Leon Lazaroff in New York firstname.lastname@example.org
To contact the editor responsible for this story: Emma O’Brien at Eobrien6@bloomberg.net