Chip stocks relatively flat as analyst advises caution

The chip sector fell Monday as Deutsche Bank advised caution in the specialist chip market because of economic uncertainty.

The chip sector, as measured by the Philadelphia Semiconductor Index, fell 1.63 points or 0.42 percent in midday trading.

Deutsche Bank analyst Arnab Chanda reiterated his cautious view on companies that makes specialist chips, in constrast with broad-based chip makers like Intel Corp.

"Though first-quarter earnings were solid for the most part, we believe that caution is still warranted give uncertainties in the current economic environment," he said in an analyst note.

Graphics chip maker, Nvidia Corp., which Arnab included in his list of specialist chip makers, fell 22 cents to $19.93 while another specialist chip maker on his list, Altera Corp., fell 8 cents to $21.78.

Shares of Chartered Semiconductor Manufacturing Ltd. fell after Citigroup analyst Horng Han Low recommended investors sell the stock on its high share price.

He said the company's share price has already included improved prospects from a recent manufacturing acquisition. While management is executing well, it is not translating into earnings-per-share growth, he said.

Chartered shares fell 29 cents, or 4.9 percent, to $5.61 in midday trading. They have traded in the past year between $4.70 and $9.55.

Shares of memory-chip maker Stec Inc. soared after a number of analysts commented on the possibility of major contracts for the company's solid-state drives, a technology that hopes to replace conventional spinning computer drives.

Lazard Capital Markets analyst Daniel Amir said that his checks indicate that Stec will be supplying solid-state drives to a major personal computer maker, most likely Apple, Hewlett Packard or Dell.

Amir described it as a "a significant milestone for the company."

Stec shares rose 78 cents, or 9.5 percent, to $8.97 in midday trading. They have traded in the past 12 months between $5.67 and $11.05.