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(May 4) Semiconductor stocks fell in morning trading Tuesday, however, Citi says, Semiconductor stocks still have 'more upside before the crash'.

Three semiconductors have now warned that a correction is coming, but Citi thinks "it's too early" and expects "more upside beforethe crash."

Analyst Christopher Danely notes that Texas Instruments(TXN-0.6%), ON Semiconductor(ON-0.6%), and Power Integrations(POWI-0.8%) provided guidance for a "below-seasonal quarter due to double ordering."

Danely: "We believe it’s too early to downgrade as all three companies are not experiencing a decline in bookings or lead times, they are just concerned that business is 'too strong'."

Citi thinks the correction will happen at "some point" but only after the shortages are fixed and lead times narrow, which could happen in Q4 or the first half of next year. The firm expects upside to Q2 and Q3 as lead times remain extended.

Citi maintains Buy ratings on Texas instruments and ON Semi and doesn't have a rating on POWI.

The Philadelphia Semiconductor Index is currently down1.6%, slightly ahead of the1.3%decline from the broader tech sector(NYSEARCA:XLK).