Chip investors may want to prepare for a rainy month. It's

earnings warning season again.

In recent quarters, cautionary words from semiconductor and semiconductor equipment companies about quarterly results falling short of expectations have become almost as

de rigeur

as the earnings reports themselves.

The second quarter is shaping up to be no exception as a combination of high chip inventories, an economic downturn and

Regulation FD

will prompt companies to broadcast whether the quarter is as foreseen. The warnings, which often start about six weeks before a quarter's end, could take on more significance this time because investors are searching for any indication the industry has hit a bottom. Some investors already are betting the bottom is in sight, making it time to buy because chip stocks run up fast when fundamentals actually improve. The

Philadelphia Semiconductor Sector Index

has jumped 31% since the end of the first quarter. The severity of the warnings could be a gauge of whether investors are leaping in too early or are timing the cycle right.

So far this quarter, the clouds are gathering over the semiconductor sector.

Fairchild Semiconductor

(FCS)

, which makes a broad range of chips, on Tuesday lowered its guidance for the quarter. In a statement, the company said second-quarter revenue will come in at the low end of its guidance given six weeks ago for a flat to down 5% quarter. Last week two companies lowered expectations, chip fabricator

Chartered Semiconductor

(CHRT)

and specialty chipmaker

Triquint Semiconductor

(TQNT)

.

On tap are financial updates from several other companies that could bring similar bad news. Semiconductor equipment maker

Novellus Systems

(NVLS)

will give a mid-quarter update on May 31 during which at least one Wall Street investment house expects the company to warn about a revenue shortfall. Microprocessor giant

Intel

(INTC) - Get Report

will give its first scheduled mid-quarter report on June 7, the same day specialty chipmaker

Lattice Semiconductor

(LSCC) - Get Report

also will discuss where business stands.

More?

And those are just the scheduled updates. Last quarter, the first week of the quarter's third month was ripe with warnings from companies like

Applied Micro Circuits

(AMCC)

and

Broadcom

(BRCM)

as the companies tried to come to grips with inventory and demand issues.

If history is any indication, warnings aren't good news for chip stocks. The day after it

said earnings per share would be about one-third of what analysts expected, Broadcom shares lost 16%. And last week, wireless chipmaker Triquint saw its stock lose 17% the day after it announced that its revenue would fall 20% to 26% in the second quarter, not the 10% to 15% decline it originally forecast. It also said earnings per share would be only 3 cents, not the 11 cents that analysts had been expecting.

Chartered, a Singapore-based semiconductor manufacturer, or foundry, lowered its guidance on May 21, saying revenue would fall 48% in the second quarter, not 25% as was anticipated. Among its largest customers are communication chip companies like Broadcom. Chartered's ADRs lost about 2% the following day and have lost 8.5% since then.

Byron Walker,

UBS Warburg's

semiconductor capital equipment analyst, expects that Novellus and other chip equipment stocks will come under pressure as investor expectations are reconciled to the continued deterioration of fundamentals. Novellus makes the equipment that semiconductor companies use to build their chips. (UBS Warburg hasn't done underwriting for Novellus.)

Who Needs Fundamentals

Fundamentals haven't played much of a role lately in those prices, as investors have jumped in on the hopes that they can catch the eventual run-up in the stock. And some investment houses push that notion to investors.

Prudential Securities

upgraded three chip equipment makers on Friday, telling investors to buy now to get in on the recovery it expects in the next few months.

But Walker expects Novellus to lower order and EPS guidance during its May 31 update to 25 cents a share from the 40 cents a share the company indicated it would earn during its April earnings call. That's above the 39 cents a share consensus.

Meanwhile, investors are bracing for bad news from Intel's mid-quarter update. During the last three quarters, Intel has warned during similarly timed updates that its revenue would fall short of targets for the quarter and revised its guidance. Based on Intel's guidance, analysts expect $6.5 billion in revenue, according to

Thomson Financial/First Call

. And at least one analyst -- Eric Ross of

Thomas Weisel Partners

-- thinks that a combination of microprocessor price cuts, high production costs and weak shipments mean Intel will lower that number this quarter. (Thomas Weisel hasn't done underwriting for Intel.)

TheStreet.com

recently

looked at some of Intel's problems.

Lattice Semiconductor also has a mid-quarter update scheduled for June 7. Lattice, which makes programmable logic devices for telecommunications and communications companies, said while reporting first-quarter results that it expects revenue to decline in the double digits during the second quarter from the first quarter. A First Call consensus shows seven analysts see revenue falling to $92 million from $111 million in the first quarter.

It's time to put the sunglasses away and grab the shovels and sandbags.