Sector Wrap: Semiconductor stocks slip slightly

Tag : Semiconductor
SAN FRANCISCO -

Semiconductor stocks dipped slightly Tuesday after an industrygroup reported that worldwide chip sales grew steadily in July butanalysts raised fears about further pricing pressures on thenotoriously volatile industry.
The Philadelphia Semiconductor Sector index fell $2.45 to $350.37in regular-session trading Tuesday.
Earlier Tuesday, the Semiconductor Industry Association reportedthat chip sales in July rose to $22.2 billion, a 7.6 percentincrease over last year and up 2.8 percent from June. Strong salesof personal computers and cell phones, which account for about 80percent of chip demand, helped drive overall sales higher.
As expected, the prices for certain types of memory chips calledDRAM and NAND flash memory continued to fall, reducing the overalldollar value those chips brought in during the latest period.
Analysts Gary Mobley and Auguste Richard with Piper Jaffray & Co.said in a note to clients Tuesday that "continued pricing pressurein memory and an unusual drop in microprocessor average sellingprices" weighed on the chip industry during the second quarter.
They blamed the drop in microprocessor prices on a shift towardlow-end laptops, which carry smaller profit margins, during theback-to-school season and cheaper graphics chips.
However, the analysts said they were optimistic that prices wouldremain stable into 2009 as sales continue to grow.
"From a demand perspective, it is our belief that the semiconductorindustry should continue to feel the angst of slow U.S. and globaleconomies," they wrote. "However, semiconductors are outperformingthe global economy (and should continue to, in our opinion)."
The biggest gainer was Infineon Technologies AG, which makes chipsfor a variety of applications, whose shares rose 48 cents, or 5.6percent, to $8.99 on speculation that memory chip maker MicronTechnology Inc. might buy struggling rival Qimonda AG. Infineonowns a majority of the shares of Qimonda, a business it spun off in2006.
Micron shares fell 2 cents to $4.22.
Qimonda shares gained 25 cents, or 12.4 percent, to $2.26.
Meanwhile, shares of Taiwan Semiconductor Manufacturing CompanyLtd., which makes chips on a contract basis for other companies,fell 35 cents, or 3.6 percent, to $9.36.
Shares of Intel Corp., the world's largest computer chip maker,were down 29 cents, or 1.3 percent, to $22.58.
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