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Spending Sputters for Chipmakers

Stocks in this article: TXN NSM MSFT ADBE

NEW YORK ( TheStreet) -- Are storm clouds gathering over the tech sector? If recent comments from chipmakers Texas Instruments (TXN) and National Semiconductor (NSM) are anything to go by, all is not well -- especially with PCs.

Investors were closely monitoring Texas Instruments' mid-quarter update Thursday, as the firm narrowed its revenue and profit forecast. While the chipmaker kept its outlook in line with Wall Street's expectations, Ron Slaymaker, Texas Instruments' head of investor relations, said that the PC, hard disk drive and TV chip markets are underperforming this quarter.

Texas Instruments

The executive, however, added that Texas Instruments is seeing strength in its industrial and wireless chip businesses.

National Semiconductor, which makes chips for the smartphone and industrial sectors, is also seeing an uncertain spending climate. The silicon specialist missed Wall Street's revenue estimate in its first quarter results on Thursday and gave weak guidance, spooking investors. The company's shares fell 89 cents, or 6.9%, to $12.01 on Friday.

"We'd all like to think that consumer spending is onward and upward, but I don't think it is," National Semi CEO Donald Macleod told Reuters.

The comments from Texas Instruments and National Semiconductor run counter to the more bullish tone recently struck by Microsoft (MSFT). The software giant said that the PC market is thriving during its fourth quarter results, estimating that PC sales grew between 22% and 24%.

Tech research firm IDC has also cited increasing PC demand. Worldwide PC processor shipments rose 3.6% between the first and second quarters of 2010, it said, in a recent report, compared to the average increase of 1.6%.

IDC, which forecasts worldwide PC processor unit growth of 19.8% this year, nonetheless noted a weakening in demand during August. "Major OEMs cut PC build orders with their contract manufacturers who, in turn, have cut orders for commodity components," said Shane Rau, an IDC research director, in a statement.

There are also other signs of weakness in the PC market. Morgan Stanley, for example, downgraded Adobe (ADBE) on Friday, citing falling PC demand.

The downgrade helped push Adobe's stock down 81 cents, or 2.47%, to $32.05, outpacing the modest dip in tech stocks that saw the Nasdaq slip 0.06%.

Shares of Texas Instruments fell 12 cents, or 0.5%, to $23.72.

--Written by James Rogers in New York.

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