Sector Snap: Chip stocks mostly rise

Catalyst shares surged $2.43, or 57.6 percent, to $6.40. In the past year, the stock has traded between $3.16 and $7.92, and is off nearly 13 percent year-to-date.

ON Semiconductor said Thursday it will buy the analog and mixed-signal chip maker for $115 million in stock. The company is paying 0.706 of its own shares, worth $8.84 at Wednesday's close, for each share of Catalyst. The price is a 53.7 percent premium to Catalyst's Wednesday closing price of $4.06.

ON shares advanced 43 cents, or 4.9 percent, to $9.27.

In a note to investors, Kaufman Bros. analyst Suji De Silva called the acquisition a "positive step in the company's continuing consolidation theme."

De Silva, who rates the stock "Buy" with a $13 price target, also noted that ON reiterated its second-quarter guidance Thursday, which includes an expectation for $545 million to $560 million in revenue.

"We believe ON is seeing the benefit of its end market diversification, with healthy computing demand and relative strength in other economically sensitive end markets, such as communications, consumer and auto," the analyst wrote.

Meanwhile, shares of AMD, which is the world's No. 2 maker of computer microprocessors behind Intel Corp., rose 9 cents to $5.15.

The company, which has been struggling to digest its $5.6 billion purchase of graphics chip maker ATI Technologies and keep pace with Intel in the microprocessor market--is set to release its second-quarter report after the market closes.

Analysts polled by Thomson Financial expect an adjusted loss of 52 cents per share--less than half the adjusted loss per share the company posted in the year-ago quarter--on $1.45 billion in revenue.