Chipping Away: Downturn Chisels Telecom, Semiconductor Stocks

The economic downturn took another swipe at the chip sector Friday, sharpening its scythe on the telecommunication-related companies and whatever else was in the way.

Motorola (MOT), the telecommunications company that also makes semiconductors, on Friday morning lowered its estimates for semiconductor growth and for the cellular phones that use those chips. That, combined with a rough outlook from server giant Sun Microsystems (SUNW), pushed down Texas Instruments (TXN) and more general chip companies like Intel (INTC).

Instead of the worldwide semiconductor market growing 10% to 15% this year, Motorola now sees growth that's at best flat and possibly down compared with 2000. One reason for this is that it expects worldwide sales of fewer than 500 million cell phones in 2001, down from the low end of 525 million to 575 million. And with the bottom still falling out of the market, Motorola says it's looking at the possibility of an upturn in the third or fourth quarter. ...