PC Supply Chain Could Be 'Overheated'

NEW YORK (AP) -- The personal computer supply chain may be facing a period of slight oversupply, FBR Capital Markets warned Monday, downgrading Advanced Micro Devices Inc. and taking Marvell Technology Group Ltd. off of its "Top Pics" list.

In a client note, FBR analyst Craig Berger said there is a chance that some fourth-quarter PC production has been pulled into the third, creating a chance that the supply market is "overheated."

He cited three factors: The Oct. 22 launch of Microsoft Corp.'s new operating system, Windows 7, has led PC makers and others to stockpile some finished products. Tight supply of components used for computer parts such as hard drives and DRAM, a type of flash memory, has caused suppliers to move production up to avoid shortages. And the massive celebrations this month for the 60th anniversary of communist rule in China "potentially motivated some to build PCs in September and not October," Berger said.

All of that could leave the PC industry with more inventory to get through, though there have been some signs of improving demand among consumers.

Berger cut AMD, a computer chip maker based in Sunnyvale, Calif., to "Market Perform" from "Outperform" and lowered his price target to $6 from $7.

He left Santa Clara, Calif.-based Marvell, another chip maker, with an "Outperform" but took it off FBR's "Top Picks" list.

Berger replaced Marvell with Microsemi Corp., an Irvine, Calif. company that makes chips for products from missiles to TVs. He said the company "is working its way back into the good graces of the investment community through sound execution and a quick earnings recovery."

AMD shares edged up 4 cents to $5.35 in morning trading, while Marvell rsoe 26 cents to $15.35. Microsemi rose 64 cents, or 4.3 percent, to $15.39.

More in Industry 4.0