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Market Update

Chip Stocks Cut Both Ways for Some Funds

What goes up, comes down for stock funds with big chipmaker stakes.

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Earnings and revenue warnings this week from semiconductor companies Intel (INTC) and National Semiconductor (NSM), as well as from wireless-phone maker Motorola (MOT), illustrated, yet again, how far the semiconductor-industry stocks have fallen off the torrid pace they kept earlier this year. A look at the performance of diversified mutual funds with big semiconductor stakes shows how the industry's downturn has reached beyond racy technology sector funds.

After the markets closed on Thursday, Intel (INTC) said fourth-quarter revenue would be essentially flat instead of up 4% to 8% as previously expected, thanks to flagging personal-computer demand. Earlier National Semiconductor (NSM) also blamed low PC demand for a projected 10% sales shortfall in the current quarter, while Motorola said weakness in its chip-making business would hurt fourth-quarter revenue and earnings. National Semiconductor lost 5.6% of its value on Thursday and Motorola traded below its 52-week low of $17.63 before closing at $17.75. Intel was relatively unchanged in after-hours trading, hovering around $32.

Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.