Chip Stocks Get Chopped

As it stands, expectations of PC industry growth are strong, but not out of control. Last month, industry research firm IDC upped its forecast for 2007 PC unit shipment growth from 12.2% to 12.6%.

But the desirability of PCs this holiday season is a wildcard. True, Intel and AMD will both have new microprocessors available. But there's not much else in the way of cool, new PC technology to entice shoppers to spend money on laptops instead of competing electronic products like MP3 players, smart phones and video game consoles.

In a note to investors earlier this week, Citigroup analyst Glen Yeung said that PC maker Dell(DELL) is paring back its microprocessor orders due to a perceived softness in demand from U.S. consumers -- not a good sign for the holiday season.

Of course, demand for PCs in foreign markets is on the rise -- that may ultimately determine whether chipmakers avoid another inventory glut.

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