The PHLX Semiconductor Sector index (SOX), a modified capitalization-weighted index composed of semiconductor companies, tumbled 2.26% to an intraday low of 700.62 on Wednesday after Qualcomm [NASDAQ:QCOM] lowered its revenue forecast for the fiscal third-quarter ending June 2015 by about 21%, to between $5.4 billion and $6.2 billion, from between $6.7 billion and $7.2 billion. Wall Street was expecting $6.47 billion. 

For the full year, the company sees revenues of $25 billion to $27 billion, below its prior forecast for $26.3 billion to $28 billion. The company didn’t elaborate on the reasons for the revenue shortfall. In early February, Samsung [KRX:005930] ditched Qualcomm's Snapdragon 810 chipset in favor of its own Exynos 7420 for both new Galaxy models, the S6 and S6 Edge. This may explain, in part, the decrease in revenues forecasted.

For the fiscal second-quarter ended March 2015, Qualcomm reported GAAP revenues of $6.89 billion, up 8% year-on-year, and GAAP EPS of $0.63, down 45% year-on-year. Non-GAAP EPS with ex-items was $1.41 per share, up 4% year-on-year. Analysts were expecting revenues of $6.82 billion and non-GAAP EPS of $1.33 per share. 

Qualcomm’s fiscal Q2 EPS was affected by share buybacks and higher effective tax rates of 32% for GAAP and 20% for non-GAAP in 2015, compared to 14% for GAAP and 15% for non-GAAP in fiscal Q2 2014. During the last quarter, Qualcomm repurchased 27.8 million shares, at an average cost of $68.35 per share. As the result, the diluted shares used to calculate the EPS in fiscal Q2 2015 was 1.67 billion shares, compared to 1.72 billion shares in Q2 2015, down 3.03%.

In February, Qualcomm was found guilty of violating the anti-monopoly law by the China's National Development and Reform Commission (NDRC) and was fined a penalty of 6.1 billion Chinese renminbi or about U.S. $975 million. The company said that the fine is not deductible for tax purposes and was accounted for discretely.

Texas Instruments [NYSE:TXN] didn’t fare well either last quarter for both earnings results and their forward guidance. On Wednesday, the company reported the first-quarter revenue of $3.15 billion, up 6% year-on-year, and GAAP EPS of $0.61 per share, up 39%. Both revenues and EPS were just shy of analysts' estimates of $3.2 billion and $0.62 per share, respectively. 

The company blamed the tepid results on continuing weaknesses in communications equipment and in the personal electronics markets, particularly for wireless infrastructure equipment and PCs. A steep decline in the currency exchange rate for the euro relative to the U.S. dollar was cited as one of the reasons for the revenue and earnings shortfall.

For the current quarter, Texas Instruments said revenue will come in between $3.12 billion and $3.38 billion, and have EPS of $0.60 to $0.70, which are below consensus for revenue of $3.44 billion and EPS of 73 cents a share.

The SOX index is up 1.0% year-to-date, underperforming the NASDAQ composite's 7.52% gain for the year. The index, which has been moving in a bearish rising wedge since September of last year, tumbled 3.53% to an intraday low of 660.58 on March 26, and bounced off the lower trendline of the rising wedge.

The SOX has been consolidating at around the 700 level but failed to break out the trendline resistances this week. SOX bellwethers, including QCOM, TXN, Intel [NASDAQ:INTC] and Xilinx [NASDAQ:XLNX], provided either a mixed bag of forward guidance that were lower-than-expected or had tepid outlooks. In the event of a rising wedge breakdown, the next technical supports for the SOX index are the 662.29 level, or 38.2% Fibonacci retracement, and the 639.9 level, or 50% Fibonacci retracement.

Disclosure: No Position in QCOM, TXN or any other stocks mentioned.