We’ve looked 10 semiconductor companies and evaluated their chances of reaching existing price targets during the coming year. The companies are Intel Corp. (NASDAQ: INTC), Advanced Micro Devices Inc. (NYSE: AMD), Micron Technology Inc. (NASDAQ: MU), Broadcom Corp. (NASDAQ: BRCM), Qualcomm Corp. (NASDAQ: QCOM), ARM Holdings plc (NASDAQ: ARMH), SanDisk Corp. (NASDAQ: SNDK), Altera Corp. (NASDAQ: ALTR), Applied Materials Inc. (NASDAQ: AMAT), and Texas Instruments Inc. (NYSE: TXN). Data comes from Yahoo! Finance and MarketWatch.

Intel Corp. (NASDAQ: INTC) has a consensus price target of $27 and current price around $26.83, for a potential upside of about 1%. Intel reported stellar earnings last week and the stock posted a new 52-week high earlier this morning. Sales of PCs have not been as weak as feared, and margins have remained high. The new Ultrabooks, which the company is supporting with a very strong marketing budget, could really push the company substantially higher. As of this moment though, shares are fully valued.

Advanced Micro Devices Inc. (NYSE: AMD) has a consensus price target of $6.00 and a current price around $6.55, leaving no upside. The company reports earnings tomorrow and is expected to post EPS of $0.16 on revenue of $1.72 billion. The company’s shares have jumped by about a dollar in the past month, and continued improvement, especially in the server market, should push the target price higher.

Micron Technology Inc. (NASDAQ: MU) has a consensus price target of $8.75 and a current price around $8.00, for a potential upside of 9%. Last month the company’s price target was $8/share and the shares were trading at around $6.25. How much more steam can be left in Micron after that?

Broadcom Corp. (NASDAQ: BRCM) has a consensus price target of $41 and a current price around $34.92, for a potential upside of 17%. Broadcom shares have risen by more than $5/share in the last month, but unlike Micron, there’s still a lot of headroom.

Qualcomm Inc. (NASDAQ: QCOM) has a median price target of $67 and a current price around $58.60, for a potential upside of 14%. Qualcomm shares have gained more than 7% in the first three weeks of the year and the share price is up more than $4. The company has a firm position in the mobile device market and the company should continue to post growth in 2012.

ARM Holdings plc (NASDAQ: ARMH) has a consensus price target of $33.75 and a current price around $27.75, for a potential upside of more than 22%. ARM’s target price has jumped by nearly $7/share in the past month, but it is trading at nearly the same price as a month ago. Shares gained nearly 35% in the past year, but royalty payments are falling. For the year-to-date, shares are slightly down. To hit its new target, ARM has to get going.

SanDisk Corp. (NASDAQ: SNDK) has a consensus price target of $59.50 and a current price around $51.87, for a potential upside of 14.7%. SanDisk’s shares are up about 5.5% so far this year after a nearly flat 2011. Apple’s recent acquisition of of a NAND maker could sharply curtail SanDisk’s sales of the chips for iPhones and iPads.

Altera Corp. (NASDAQ: ALTR) has a consensus price target of $43 and a current price around $39.90, for a potential upside of 7.8%. Altera’s price target has been raised in the past month, and the company’s share price is also higher. Shares have risen more than 7% year-to-date, and the company is expected to report EPS of $0.42 and revenue of $447.52 million tomorrow.

Applied Materials Inc. (NASDAQ: AMAT) has a median price target of $13 and a current price around $12.29, for a potential upside of 5.8%. AMAT’s shares have jumped more than 15% since the beginning of January, and the price target has not changed. There’s not a lot to like here as far as expected upside goes.

Texas Instruments Inc. (NYSE: TXN) has a consensus target price of $34 and a current price around $33.42, for a potential upside of less than 2%. TI is expected to report EPS of $0.39 and revenue of $3.25 billion after the market closes today. The company lowered estimates in December, and there’s a decent chance TI will beat those lowered expectations. If so, a new target nearer the company’s 52-week high of $36.71 would be in order. That could raise upside potential to around 12%.

In the last month, Intel has essentially hit its target price, and because the target hasn’t been raised, there could be some question among analysts about the staying power of the recent rise. Broadcom and Qualcomm offer the best bets to post share price gains, and the targets for both are well within reach.

Paul Ausick

For the quarter, Intel reported EPS of $0.64 on revenue of $13.9 billion, compared with a consensus EPS estimate of $0.61 and a revenue estimate of $13.72 billion. For the full year, Intel posted EPS of $2.39 on revenue of $54 billion. The consensus estimate called for EPS of $2.37 and revenue of $53.84 billion.

In 2011, Intel generated about $21 billion in cash from operations, paid dividends of $4.1 billion and used $14.1 billion to repurchase 642 million shares of stock.

Gross margins for the year slipped -1.9% on a non-GAAP basis and -2.8% on a GAAP basis. For the quarter, gross margins were 65.5%, up 0.7%, on a non-GAAP basis and 64.5% on a GAAP basis, down -0.1%.

In its outlook for next quarter, Intel expects revenue of $12.8 billion, in line with the current analysts’ estimate. The company expects GAAP gross margin of 63%, and 64% on a non-GAAP basis. The company didn’t provide a capital spending figure for the first quarter of 2012.

For the full fiscal year 2012, Intel forecasts gross margins of 64% on a GAAP basis and 65% on a non-GAAP basis. Capital spending is expected to total $12.5 billion, and the company did not provide a revenue estimate for the year. The current analysts’ estimate for 2012 revenue is $55.08 billion.

Intel’s shares are trading up about 1.25% in after-hours trading, at $25.95 in a 52-week range of $19.16-$25.92. If the share price holds, Intel is on its way to a new 52-week high.

Paul Ausick

Many of Apple’s suppliers are well-known, but the list includes Advanced Micro Devices Inc. (NYSE: AMD), Cypress Semiconductor Corp. (NASDAQ: CY), Broadcom Corp. (NASDAQ: BRCM), Fairchild Semiconductor International Inc. (NYSE: FCS), Flextronics International Ltd. (NASDAQ: FLEX), Jabil Circuit Inc. (NYSE: JBL), Vishay Intertechnology Inc. (NYSE: VSH), TriQuint Semiconductor Inc. (NASDAQ: TQNT), SanDisk Corp. (NASDAQ: SNDK), ON Semiconductor Corp. (NASDAQ: ONNN), and Qualcomm Inc. (NASDAQ: QCOM).

The report is based on 229 audits, of which 14 were specialized environmental audits and 27 process safety audits. Apple found 6 current cases of suppliers hiring underage workers and 13 historical cases of child labor violations. About these violations, the company said:

In each case, the facility had insufficient controls to verify age or detect false documentation. We found no instances of intentional hiring of underage labor. We required the suppliers to support the young workers’ return to school and to improve their management systems—such as labor recruitment practices and age verification procedures—to prevent recurrences.

Chinese environmental groups last year charged that 27 of Apple’s suppliers were dumping toxic gases and heavy metal sludges into the country’s land and air. The company’s audits revealed that 112 supplier facilities were not properly storing, moving, or handling hazardous chemicals correctly; 69 facilities were illegally dumping or failing to recycle hazardous waste; and 52 facilities failed to label hazardous materials. Apple also reported that 58 facilities failed to monitor and control air emissions.

Apple had come under increasing pressure to name its suppliers and to hold them to a higher standard following suicide attempts by 18 workers and 14 deaths at China’s Foxconn facility in 2010.

Paul Ausick

The world’s largest software company has now signed agreements with handset makers Samsung, HTC Corp., LG, and eight other makers, which together manufacture about 70% of all smartphones using the Android operating system. So, while Google may give away Android, the operating system is no longer free. But Google doesn’t get any payment — checks are made out to Microsoft.

Microsoft has been pressing smartphone makers for months to pay up, and most have been doing so. Google has spoken out against all the patent lawsuits over mobile hardware and software, but the company is hedging its bets with its acquisition of Motorola Mobility Holdings Inc. (NYSE: MMI). Apple has been particularly aggressive in pursuing what it believes to be Google’s patent infringements. Another aggressive actor is Oracle Corp. (NASDAQ: ORCL), which acquired the patents and copyrights on the Java programming language when it acquired Sun Microsystems.

Google may end up having to compensate handset makers for the Microsoft fees, especially if the new Windows Phone operating system starts to encroach on Google’s lead in mobile platform software. Nokia Corp. (NYSE: NOK) is not the only smartphone maker that will be using the new Microsoft mobile operating system.

One thing that might happen is that Microsoft could agree to license Windows Phone at a lower price if a handset maker agrees to replace Android with the new Microsoft operating system. Google, which derives virtually all of its revenue and profit from advertising, must be able to grow its mobile advertising base and to do that it needs Android out there on as many smartphones as possible. It’s a jungle out there.

Paul Ausick

We’ve looked 10 semiconductor companies and evaluated their chances of reaching existing price targets during the coming year. The companies are Intel Corp. (NASDAQ: INTC), Advanced Micro Devices Inc. (NYSE: AMD), Micron Technology Inc. (NASDAQ: MU), Broadcom Corp. (NASDAQ: BRCM), Qualcomm Corp. (NASDAQ: QCOM), ARM Holdings plc (NASDAQ: ARMH), SanDisk Corp. (NASDAQ: SNDK), Altera Corp. (NASDAQ: ALTR), Applied Materials Inc. (NASDAQ: AMAT), and Texas Instruments Inc. (NYSE: TXN). Data comes from Yahoo! Finance and MarketWatch.

Intel Corp. (NASDAQ: INTC) has a consensus price target of $27 and current price around $24.47, for a potential upside of 10.3%. Intel has put a lot of marketing muscle behind its Ultrabook design, with more models to come from more manufacturers in 2012. A new version of the Windows operating system is also due in late summer that should help with Ultrabook sales. Intel still hasn’t come up with a strategy to attack the mobile device market, and while that won’t be fatal, it could weigh on revenue and profits next year unless the Ultrabook is a blowout success.

Advanced Micro Devices Inc. (NYSE: AMD) has a consensus price target of $6.20 and a current price around $5.36, for a potential upside of 15.7%. AMD’s share price fell more than -33% in the past 12 months. The company introduced a new high-speed graphics chip recently that has been well-received. AMD’s server market share is wobbly though, although it has made progress in notebooks. But expecting a gain of more than 15% seems like wishful thinking.

Micron Technology Inc. (NASDAQ: MU) has a consensus price target of $8 and a current price around $6.24, for a potential upside of 28.2%. Micron’s shares jumped last week on a weak earnings report primarily on the basis of more expected consolidation in the DRAM market. Pricing has been weak for DRAM chips, but Micron is in a better position than most competitors to be among the survivors. Still, a lot of things need to go right for the company to hit its price target.

Broadcom Corp. (NASDAQ: BRCM) has a consensus price target of $41 and a current price around $29.53, for a potential upside of 38.8%. Broadcom has posted strong revenue and profit growth in 2011, but its share price has fallen by about -32%. Revenue and profit are both expected to continue growing in 2012, and the company is not a bad bet to hit its current price target.

The sales estimates come from a survey of analysts conducted by Reuters, which cited one analyst’s comment that pretty much says it all:

It’s really only the iPhone family and the (Samsung) Galaxy family flying off the shelves. Everyone else is just picking up the leftovers.

Nokia’s forecast sales are more than 30% below the company’s sales in the same period a year ago. The company has released its first phone using the Windows Phone 7 operating system from Microsoft Corp. (NASDAQ: MSFT), but the company continues to rely for sales on the Symbian-powered phones that are not just yesterday’s technology, but last year’s technology.

In its earnings release yesterday, RIM estimated sales of 11-12 million units in the current quarter, substantially below the Reuters survey’s estimate. The worse news is that the company’s new operating system, QNX, is being delayed until late in 2012. QNX was originally scheduled for delivery in the first quarter of next year.

Unlike Apple, Samsung, HTC, and even Nokia, RIM’s new operating system is untried in a smartphone and the product’s initial release as ‘BB10’ for the company’s PlayBook tablet was a resounding failure. By late next year, the new operating system could very well be yesterday’s news — or worse.

If the holiday season turns out as successfully as the Reuters survey suggests, then Apple and Samsung will get a lucrative visit from Santa. Nokia, RIM, and HTC won’t exactly be getting coal, but investors will surely believe that they should have done better.

Paul Ausick

The biggest problem with the cable companies’ set top boxes is the nearly impenetrable user interface. The new Xbox Live software completely changes that, replacing the hierarchical menus with a graphical interface that can accept voice, touch, and motion commands as well as commands from a smartphone or other handheld device. The idea is to make the TV interface as intuitive and easy-to-use as a smartphone.

Apple’s latest Apple TV offering lets users stream content from the iPhone to a TV set through its AirPlay feature. Google is working with Samsung Electronics (OTC: SSNLF) to integrate Google TV directly into a TV set. Users will still need a cable TV subscription to gain access to cable programming through the Xbox or other TV device.

One interesting thing about all this is that Microsoft, Apple, and Google are very likely to take over the distribution of content from cable companies like Comcast and Verizon Communications Inc. (NYSE: VZ). Not having to design, build, and market a set top box with a modern interface is not a bad thing for the cable guys, who will still make money by requiring users to pay for the cable subscription. Customers, of course, will very likely have to pay a (modest) fee to Microsoft, Apple, or Google for the privilege of connecting to the TV through another device. Xbox Live, for example, requires a $5/month fee for its premium service which allows users to control the TV.

Another possibility is that the TV control software will be paid for by advertising. Xbox Live does include advertising, and although Google has not revealed what it plans to do with its software, the company could choose to offer the TV software on an ad-supported basis.

A second interesting thing about Microsoft’s announcement is that this is one area in which Microsoft could actually be leading both Apple and Google. The Xbox Live interface is consistent with the Windows Phone 8 interface and will be the same as the user interface on Windows 8 which is due in the second half of next year. Apple was first to integrate handheld smartphones and tablets with a TV, but the Microsoft offering is far more mature than Apple’s offering. Google got sidetracked on a failed try with Logitech International SA (NASDAQ: LOGI), but its TV deal with Samsung could change things around because Samsung also sells more Android-based phones than any other company. Integrating Android with a TV is natural extension, but Google and Samsung are getting a bit of a late start.

The Xbox Live announcement could usher in the next big thing or it could just be another swing and miss at the integration of computing devices and TV sets. This time does look like it will be different.

Paul Ausick

The quicker-than-expected re-start doesn’t really do much to change the landscape though. In its release, Western Digital had this to say about industry conditions going forward:

The company believes that hard drive industry shipments in the December quarter will be limited to approximately 120 million units due to production and supply constraints related to the historic flooding in Thailand. This includes units that were in inventory at the beginning of the quarter. The company believes that demand for the December quarter is in the range of 170 million to 180 million units. The company believes that significant industry supply constraints will continue in the March quarter and beyond.

In an interview with All Things Digital last week, Seagate CEO Steve Luczo provided an essentially identical forecast for a return to normalcy in the production of disk drives. The problem, as he sees it, lies in the mix of drives that will be available. According to Luczo,

companies like Western Digital, who don’t have access to the sliders [a critical component in a drive], are shipping one- and two-headed devices so they can ship more units. So instead of shipping a drive that contains two disks and four heads, which is what the market needs right now, they’ll be shipping a one-disk, one-head or one-d[i]sk, two-head product. They’ll be maximizing the units they can sell, rather than shipping the product the customer actually needs.

The customers he is referring to, of course, are the PC makers. Luczo said that drive prices to computer manufacturers would likely rise 20% and that prices to resellers would rise even higher. For HP and Dell, that means either that they raise prices on their products or that they eat the loss.

The 50-60 million unit shortfall in the December quarter will be filled in over the course of 2012, but even when full production returns, Luczo estimates that about 100 million drives will have been lost. Not every one of those drives would have been shipped in a new PC or server, but around 60-70 million would have. That’s a huge hit to the computer makers.

Western Digital’s shares are up about 11% this morning, at $32.49, in a 52-week range of $22.64-$41.87. Seagate’s shares are off about -1%, at $17.22, in a 52-week range of $9.05-$18.60. HP’s shares are down less -0.5%, at $28.10, in a 52-week range of $21.50-$49.39, and Dell’s shares are down about -0.4%, at $15.73, in a 52-week range of $12.99-$17.60.

Paul Ausick

In its announcement, RIM said that it now believes “that an increase in promotional activity is required to drive sell-through to end customers.” So far, the promotional activity has been limited to severe price cuts at stores like Best Buy Co. Inc. (NYSE: BBY) and Wal-Mart Stores Inc. (NYSE: WMT), where PlayBook prices have been cut to $199 or $299, depending on memory configuration. That’s a discount of $300 from the original price of the device.

The company noted that it had seen “a significant increase in demand” for the PlayBook following its promotional pricing. Right — selling something at less than cost almost always generates more demand. If this is the only promotional strategy RIM has, the strategy’s a loser.

RIM also said that the its new strategy — that is, giving the PlayBook away — will “accelerate the adoption of its QNX-based platform,” which the company now plans to ship in February. Consumers who buy a PlayBook at the promotional pricing will get a free upgrade to the new software when it becomes available. Once again, RIM is being forced to give away something that it could have charged real money for.

On the financial front, RIM guided third-quarter EPS to the mid-point of its previous guidance of $1.20-$1.40, and lowered revenue estimates “slightly” from the previous range of $5.3-$5.6 billion. The company also expects lower volume on fourth-quarter shipments. Finally, RIM “no longer expects to meet its full year adjusted diluted earnings per share guidance of $5.25-6.00.” The company did not say what it expects full-year EPS to come in at.

RIM’s needs to get its BlackBerry phone sales back up. The PlayBook is a sideshow for the company, and will continue to be a sideshow until the tablet offers full compatibility with the company’s phones. But even then it might be too late, given the stream of new tablets eager to cut into Apple’s enormous market share lead. RIM needs a far more compelling product than it now offers and it needs to price it so that it makes money.

RIM’s shares are down more than -6% about an hour before the market opens this morning, at $17.44, in a 52-week range of $15.98-$70.54.

Paul Ausick

Intel’s median target price is $27.00, unchanged from a month ago. The company’s shares posted a new high in the last month of $25.50, and are trading at $24.81 at around noon today. The implied gain based on the current target price and today’s share price is 8.8%. That’s the lowest among these five stocks, but Intel pays a 3.6% dividend yield, well above any of the others. CEO Paul Otellini told a technology conference yesterday that the company is focused on a three-pronged strategy aimed at emerging markets, where PC sales are strong; the Ultrabook market, which is off to a good start and expected to improve; and higher server sales. Otellini admitted that Intel doesn’t have a lot of mind share, or market share, in the mobile market, but expects that to change with the delivery of Windows 8 from Microsoft Corp. (NASDAQ: MSFT).

AMD’s median target price is $6.20, about -5% lower than it was a month ago. Shares are trading today at $5.62, for a potential gain of 10.3%. The company has given some hints about its future plans now that a new CEO is in place, and the big change is that AMD no longer sees Intel as its chief competitor. The integrated microprocessing-graphics market, known as System-on-a-Chip, is the market that AMD plans to focus on. Qualcomm and Nvidia Corp. (NASDAQ: NVDA), among others, are the leaders here, but AMD thinks that its ATI graphics capabilities give it a good shot to compete here. This strategy is expected to be spelled out in more detail in February.

Broadcom’s median target price is now $41.50, down about -7.8% from its level of a month ago. Shares are trading today at $29.86, which calculates to a potential upside of 39%. The company also got a boost today from a report out of Lazard Capital Markets indicating that Broadcom can afford to raise its dividend beyond the current yield of 1.2%. That may be true, but the high upside potential is a combination of a lower target price and a 14.4% drop in the share price over the past month.

ARM Holdings’ median target price has jumped about 32% in the past month, to $35.00. Shares are trading at $28.05 today, indicating an upside potential of 24.8%. ARM stands to benefit more than any other chip maker from the release of Windows 8, which will include support for the chip for the first time. There is some skepticism about the impact of Windows 8, given that it isn’t expected to be available until the end of next year.

Qualcomm’s median price target is $67.00, up about 3% from its level of a month ago. Shares are trading today at $54.90, for a potential upside of 22%. The company has been getting ratings boosts from analysts for weeks now, with Goldman Sachs including Qualcomm on its list of nine technology stocks to own in 2012. The recent announcement by HTC Corp. that it would not meet its fourth-quarter revenue target is expected to cost Qualcomm a penny in earnings for the quarter, so everything isn’t as rosy as it might appear.

It’s hard to argue against Qualcomm as the choice among these five stocks based on its potential upside and its reachable price target. Expectations for ARM are higher, but may be too high given the still-long wait for Windows 8.

Paul Ausick