Chip Stocks Slide on Industry Sales Report

Semiconductor shares fell early Monday after an industry report showed thatchip sales declined in December.

In morning trading, Intel Corp. (Nasdaq:INTC) was down 94 U.S. cents at $34.75, Applied Materials (Nasdaq: AMAT) was down$2.69 at $45.06, and Texas Instruments, Inc. (NYSE: TXN) was down $1.87 at$41.21.

Analysts at Lehman Brothers and Credit Suisse First Boston reportedly wrotethat they expect chip sales to continue to drop, indicating further declines instock values.

The Semiconductor Industry Association, a trade group based in San Jose,California, said that worldwide semiconductor sales totaled $17.9 billion inDecember, down 2.1 percent from November, with all markets registeringdeclines.

The SIA said the figures were “in line with normal year-end patterns.”However, the report said, an “inventory overhang” makes it unlikely saleswill reach the 22 percent year-over-year growth forecast the SIA haspredicted.

Japan and the rest of Asia accounted for the bulk of the growth insemiconductor sales last year, the SIA said. Japan, the fastest growingmarket and the third largest, accounts for 22.9 percent of worldsemiconductor consumption, the group said.

The largest market, the Americas,grew by 34.9 percent last year, and European sales rose 32.7 percent.

The report comes as no surprise to those following the industry. Intel Corp.recently reported fourth-quarterresults that were in line with analysts’ estimates, but warned sales in the first quarter could be slow.

Chipmakers are suffering from a drop in demand for their products, ascomputer makers continue to experience a slump in the sales of personal computers.

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