SAN FRANCISCO -- The relief and applause surrounding

Marvell Tech

(MRVL) - Get Report

on Friday is keeping alive the idea that the low set by semiconductor stocks in late November is going to hold.

That's no small praise, considering investors in many other sectors have no such confidence.

Marvell shares were up 53 cents, or 7.1%, to $8.05 in recent trading, mainly on the strength of its forecast for the first quarter, which was above Wall Street estimates, and on word that the chipmaker was going to

slash 15% of its workforce

in response to the deteriorating economic condition.

Marvell's fourth-quarter revenue plunged 35% from a year earlier, a wild swing from third-quarter revenue growth of 4%, and an all-too-common pattern seen from chipmakers' earnings reports so far this year.

But amid the showcases of extreme plummets in demand seen over the past few weeks of earnings reports, a funny thing has happened with chip stocks: they've stopped going down.

On Friday, the

Semiconductor HOLDRs

(SMH) - Get Report

exchange-traded fund was off 1.3% to $16.20, at approximately the same level it traded a week ago, two months ago and three months ago.

That has put chip stocks in the unusual role of market outperformer. If you bought the SMH three months ago, you would sell today with a profit. Meanwhile, the


is down about 12% during that time, while the

S&P 500

is off more than 20%.

The secret to chip-stock success may merely be that the sector's downfall started before everything else. While we were all certain that the S&P would soon be jumping above 1,600 in the fall of 2007, semiconductor stocks had peaked that July and were on their way to losing, as a whole, more than 60% of their value by November 2008.

It's possible that by that point, the jig was up for chips and the stock charts were indicating the carnage to come in fourth-quarter earnings reports. As we've just seen with Marvell, what's another quarter of 30%-plus year-over-year revenue declines?

The stock charts then prompt the question of whether this bottoming in chip stocks is a prelude to tech stocks in general finding their trough sometime in the first half of this year.

That sort of market timing is often a fool's errand, but one could have at least argued this week that the number of good chip news items this week outnumbered the bad -- and that alone suggests some sort of improvement.

Even Marvell's first-quarter revenue projection, as painful as it is considering year-ago figures, suggests at the high end that the company's top line could decline by


37%, in line with the fall seen in the fourth quarter.

As we've previously suggested in this space, as with housing prices, nothing is going to go up until the rate of decline decelerates. Marvell makes a good case that the demand bottoming is coming sooner rather than later.

But the sector also saw indications of stabilizing demand from companies like

Sigma Designs




(XLNX) - Get Report



(MRVL) - Get Report


That's not to say that semiconductor decline can't re-accelerate, or that all chipmakers are created equal. While the smartphone market, for example, looks relatively strong in 2009, sluggish demand in computers will keep a lid on significant improvement for chip suppliers there.

On the other hand, if the industry's revenue decline is in the seventh inning, as suggested this week by Friedman Billings Ramsey analyst Craig Berger, the chances of a longer-term upside in chip stocks are beginning to improve.