Sector Snap: Chip stocks up after Intel posts strong 1Q

Semiconductor stocks rose higher than the wider technology market Wednesday, helped by strong first-quarter results from Intel Corp.

The Philadelphia Semiconductor Index rose 19.45 points, or 5.5 percent, to 371.29 in midday trading, compared to a 2.3 percent rise for the tech-heavy Nasdaq composite index.

The day was dominated by Intel's earnings, which beat Wall Street expectations on strong personal computer chip sales.

The world's largest chip maker also delivered an upbeat 2008 forecast, despite fears of a slowdown in the technology sector.

While analysts welcomed the results, the overall mood was somewhat cautious.

Wedbush Morgan Securities analyst Patrick Wang said in a note to investors that Intel's confidence in the second-quarter personal computer market is encouraging, but he remained only cautiously optimistic, given the weaker economy and unknown personal computer trends.

Intel shares rose $1.31 or 6.3 percent to $22.22. They have traded in the last 12 months between $18.05 and $27.99.

Cowen and Co. analyst John Barton saw good news for the wider chip market in Intel's results.

"We expect the solid March quarter results and healthy June guidance should set a positive tone throughout the semiconductor industry as well as providing a significant catalyst to these shares," he said in a client note.

The results helped boost stocks across the sector, with Texas Instruments Inc. shares up 85 cents or 3 percent to $29.57. They have traded in the last year between $27.51 and $39.63.

The results also helped boost companies that supply the machinery that makes the chips, which have been suffering a downturn this quarter as chip makers hold back capital spending amid economic uncertainty.

Intel's earnings were particularly good news for one of its main equipment suppliers, ASML Holding NV, which said Wednesday that its first-quarter profit fell 5 percent as customers reduced spending.

Its results did not hold back its shares, rising $2.64 or 10.8 percent to $27.14. They have traded in the last year between $21.84 and $37.41.