Semi Stocks Set for Netbook Boost

Netbooks may be forcing prices down in the PC market, but booming demand for mini-computers spells good news for other parts of the tech sector. Chip stocks, in particular, could reap the benefits of the netbook craze.

The numbers are certainly pointing in that direction. Research firm Gartner, citing strength in netbooks, recently reported that the worst of the recession may be over for PC makers. Worldwide netbook shipments are now forecast to reach 25 million units in 2009, up from Gartner's initial projection of 21 million.

This is welcome news for chipmakers such as Intel(INTC Quote), ARM Holdings(ARMH Quote) and Nvidia(NVDA Quote), shares of which have already started to rise. With the tech sector gearing up for a rebound, netbooks are making their presence felt.

Worldwide sales of semiconductors in August 2009 were $19.1 billion -- an increase of 5% from July, according to the Semiconductor Industry Association (SIA) -- partly thanks to the popularity of netbooks.

"Growing sales of netbook personal computers, which now account for approximately 17 percent of notebook PC unit sales, have created an important new market segment, filling a gap between 'smart cell phones' and conventional laptop PCs," said SIA president George Scalise, in a statement.

Falling PC prices have also helped drive this uptick in chip demand, according to the SIA. The organization estimates that, during the past year, average selling prices for PCs have declined around 14%, while memory content has increased 25%.

"Several companies are clearly benefitting from the netbook growth," added iSuppli analyst Len Jelinek in an email to TheStreet. "Intel with its Atom processor is definitely increasing sales and is poised to continue growth as they drive technology and performance with their next generation technology."