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ING Barings Downgrades Chip Stocks

ING Barings

downgraded several semiconductor companies this morning, saying it is still concerned about the possibility of a two-year slowdown in semiconductor capital spending. The comments are being made even though chip giant

Intel

(INTC) - Get Intel Corporation (INTC) Report

on Tuesday made

favorable comments about its capital spending plans.

Intel said its spending on equipment and factories will increase about 12% this year to $7.5 billion from $6.7 billion in 2000. Chip equipment makers

soared yesterday on the news.

But ING Barings said Intel can't completely mitigate the risk in the sector, so "we are choosing to remain disciplined with regard to valuation." The note went on to say: "We are encouraged that there will be significant spending on new technologies such as 300-millimeter wafer processing. However, even in that build out, delays are possible and corners can be cut."

With that in mind, the firm cut six tech stocks to hold from buy. They are:

Axsys Technologies

(AXYS)

,

BEI Technologies

(BEIQ)

,

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Cognex

(CGNX) - Get Cognex Corporation Report

,

II VI

(IIVI)

,

Newport

(NEWP)

and

Robotic Vision Systems

(ROBV)

.

ING Barings also knocked

Zygo

(ZIGO)

to a buy from strong buy.

The chip sector has been beaten up the past few months as the pace of computer sales and the pace of economic growth in general have slowed. Since chips are the brains inside computers and many electronic devices, slower sales create less demand for semiconductors.