SAN FRANCISCO -- The weakened chip and semiconductor-equipment makers are back on the defensive following a downgrade of Intel (ITNC) by Donaldson Lufkin & Jenrette.

DLJ downgraded Intel to market perform from buy, according to

CNBC

, and lowered its price target to 160 from 175. The firm notes that PC growth in the March quarter doesn't seem to be as good as expected and that much of the growth came in PCs priced below $1,000.

"We believe Intel will be challenged to meet consensus expectations for the current quarter and for the year," DLJ analyst Charles Boucher writes. "Although we continue to view Intel as an attractive stock for long-term-oriented investors, the change in the business tone for the PC industry has significantly increased the near-term risk in the stock."

DLJ lowered earnings estimates for the March quarter to $1.07 vs. its previous estimate of $1.10, which is also the

First Call

consensus. DLJ now forecasts earnings for 1999 at $4.50 vs. $4.65 previously and a $4.70 estimate from First Call.

Intel dropped 4 1/2, or 3.75%, to 115 7/16. The stock fell 7 13/16 on Friday following negative comments regarding PC sales from a number of

analysts.

In the semiconductor-equipment sector, there are additional reports from a couple of firms.

Morgan Stanley Dean Witter

noted that losses last week offer a buying opportunity in semiconductor-equipment stocks, according to

CNBC

. The firm did not return phone messages. Meanwhile,

Salomon Smith Barney

downgraded four equipment stocks, but had positive things to say about three others.

Salomon Smith Barney downgraded

Assist Technologies

(ASYT)

to neutral from buy;

ATMI

(ATMI)

to neutral from outperform;

Credence Systems

(CMOS)

to outperform from buy; and

Silicon Valley Group

(SVGI)

to neutral from outperform.

In the report, analyst Milind Bedekar notes that Assist, Credence Systems and Silicon Valley would need "appreciable revenue growth during 1999 and 2000 to justify the current valuations" he does not expect to happen. He says there is "no room for error" regarding ATMI's sales.

Assist Technologies was down 2 1/4, or 10.5%, to 19 1/4; ATMI was off 3 1/8, or 13.7%, at 19 5/8; Credence Systems fell 1 15/16, or 9%, to 19 3/16; and Silicon Valley Group slipped 1 5/16, or 10%, to 12.

But Bedekar reiterates buy ratings on

Applied Materials

(AMAT) - Get Report

,

KLA-Tencor

(KLAC) - Get Report

and

Electro Scientific Industries

(ESIO) - Get Report

. He notes that recent weakness in the stocks represent a buying opportunity.

"While equipment stocks have typically been characterized as 'group stocks' in the past, we believe that the upcoming 'steady but not spectacular' recovery should lead to a large separation amongst the winners and losers, which is the basic underpinning of our stock selection," Bedekar writes.

Applied Materials was down 3/4, or 1%, to 54 7/8, while KLA-Tencor dropped 1 1/16, or 2%, to 50 3/4 and Electro Scientific slid 13/16, or 2.2%, to 35 3/4.

Gateway Upgraded

NationsBanc Montgomery Securities

upgraded

Gateway

(GTW)

to buy from hold and set a 12-month price target of 92. No additional details were available.

Ups and Downs for eBay

Shares of

eBay

(EBAY) - Get Report

, which soared last week, are getting pummeled today on news released late Friday that the government asked the online auctioneer for information relating to an investigation of possible illegal transactions in connection with eBay's Web site. eBay said it is fully cooperating with the inquiry.

eBay was down 21 1/2, or 6.6%, to 312 1/2. The stock gained close to 95 points last week. Its 3-for-1 stock split will take place after the close of trading today.