Merrill Upgrades 11 Key Chip Stocks

Analysts raised their investment stance on the sector, citing a steadier earnings outlook and reduced capital spending for several chip makers

Merrill Lynch upgraded eight global chip stocks stocks to near-term buy: Analog Devices (ADI ),

Linear Technology Corp. (LLTC ), Maxim Integrated Products (MXIM ), RF Micro Devices (RFMD ), STMicroelectronics (STM ), Taiwan Semiconductor Manufacturing (TSM ), Texas Instruments (TXN and United Microelectronics (UMC ).

The firm also upgraded three stocks to near-term accumulate: Chartered Semiconductor ADS (CHRT ), Micron Technology (MU ) and Semtech Corp. (SMTC ).

Merrill's semiconductor team reported that although the semiconductor industry continues to struggle with overcapacity and weak demand, they believe the worst of the downturn is past. The team thinks the combination of stabilizing EPS estimates, reduced capital spending, and the bottoming year-over-year change should cause semiconductor stocks to begin outperforming -- albeit slowly -- over the next six to 12 months.

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