Chip stocks plunged, as a JP Morgan analyst downgraded market leader Intel on concerns over slowing orders and high inventory levels, an Associated Press report said.
The Associated Press report said analyst Christopher Danely downgraded Intel from 'Overweight' to 'Neutral.' He said he was increasingly concerned about a possible correction to inventory levels for personal computer components. He also noted growth limitations in the microprocessor market.
Intel shares fell $2, or 8.1%, to close at $22.67. They have traded in the last year between $18.75 and $27.99, the report said.
Intel shares are now down 14% on the week. They fell more than 4% Wednesday after Banc of America analyst Sumit Dhanda downgraded them to 'Neutral' from 'Buy,' citing concern over market growth in the first half of 2008, the report further added.
Intel competitor AMD fell 7.6% to close at $6.25. It traded as low as $6.10, its lowest point in nearly five years.
The Philadelphia Semiconductor Index tumbled 18.67 points, or 4.8%, to close at 372.85 after earlier hitting a year low of 370.04. It had ranged in the last year between 389.28 and 549.39.
The Associated Press report further said the downward move in the chip market was also fueled by FBR Research analyst Craig Berger, who said in a note to investor that the overall chip market is struggling with recession fears as it prepares to release fourth-quarter results.
Berger said business remains 'at least decent' but management teams will not likely release aggressive estimates for their first quarters.