Clearly, investors were expecting worse. After weathering a closing bell that saw its lowest stock price in six years, tech bellwether Intel(Nasdaq: INTC) issued a mid-quarter update yesterday that was largely in line with previous guidance. As a result, shares are up 8% in early trading.

Industry watchers were fearful the company would follow in the footsteps of another chip maker, National Semiconductor(NYSE: NSM), which indicated sales would likely decline over the next few months. But Intel said third-quarter revenue would come in just below the midpoint of its previous $6.3 billion to $6.9 billion range, and although unit sales are "trending toward the lower end of the normal seasonal pattern," all other guidance remains the same. In short, no bad news.

So, the chip sector appears to be hanging on. "Hanging on," however, doesn't exactly inspire great confidence. We've already questioned just how long it will take to see a recovery in the economy in general, and the PC market in particular. Intel's fortunes are bound and shackled to these dynamics, and there are enough other issues surrounding the company that investors need to adopt a cautious outlook.