Tech Winners & Losers: Intel

Updated from 2:17 p.m. ET

Shares of semiconductor companies retreated with the broader market after Intel (INTC Quote) added to a series of downbeat corporate and economic reports Wednesday, saying fourth-quarter sales have plunged 23%.

The Philadelphia Semiconductor Sector index fell nearly 4% after rallying on Tuesday.

On top of Intel's announcement, JPMorgan analyst Christopher Danely predicted more bad news ahead from chip companies, expecting many of them to report worse-than-expected earnings for the fourth quarter and disappointing guidance.

The chip sector as a whole has rallied about 30% since hitting a multiyear low in November as investors hunted for bargains.

But Danely said in a research report Wednesday that "business conditions during the rest of 2009 will remain poor for the semiconductor industry due to weak demand and the resulting inventory correction."

He said inventories won't be back in line with demand until sometime in the second quarter.

Worst off, he said, are companies supplying semiconductors to cell phone and smart phone makers. He said slower-than-usual orders from Nokia (NOK Quote), Motorola (MOT Quote) and Sony Ericsson will likely hurt chipmakers Texas Instruments (TXN Quote) and RF Micro Devices (RFMD Quote).

Shares of Texas Instruments slid 87 cents, or 5.3%, to $15.58 while RF Micro stock, already trading below $1, fell 4 cents to 88 cents.

Intel, meanwhile, cut its already-reduced guidance for the quarter ended in December because of slower demand from PC makers, joining rival AMD (AMD Quote) in projecting a sales decline of more than 20% from the year-earlier period.

Both companies' stocks tumbled Wednesday, with Intel dropping 93 cents, or 6.1%, to $14.44, and AMD falling 12 cents, or 4.3%, to $2.66.