WIRE: 01/03/2002 4:18 pm ET
Chip Stocks Rally for a Second Day
abcnews.go.com
SAN FRANCISCO (Reuters) - Semiconductor stocks rose for a second consecutive day on Thursday, amid growing optimism about an upswing in demand for microchips as an economic recovery seems to be in sight.
The Philadelphia Stock Exchange Semiconductor Sector index surged 45.20, or 8.3 percent, to 590.64, while the broader Nasdaq Composite index gained 64.98, or 3.3 percent, to 2,044.21.
Merrill Lynch, for instance, said that data released on Wednesday by a semiconductor trade organization mark the second month of growth for the industry and "validates the recovery of the semiconductor industry."
J.P. Morgan, meanwhile, said it believes some personal computer makers saw strong sales in December, decreasing concerns that an inventory build-up could hurt microprocessor maker Intel Corp. <INTC.O>
J.P. Morgan said it believes Intel's computer server chip business will grow in the current quarter, an early sign of a potential recovery in corporate information technology spending.
Among the largest gainers in chip stocks Thursday was Intel's chief rival, microprocessor maker Advanced Micro Devices Inc. <AMD.N>, which closed up 18 percent, or $2.98, at $19.37. Intel stock rose $2.52, or 7.6 percent to $35.52.
Shares of National Semiconductor Corp. <NSM.N>, which makes chips for flat-panel displays, cell phones and other devices, rose $2.66, or 8.3 percent, to $34.59.
Applied Materials Inc. <AMAT.O>, the biggest maker of semiconductor manufacturing equipment, also rose. Applied stock gained $3.82, or 9.2 percent to $45.49. The company's chief executive, James Morgan, has said he is concerned that chipmakers aren't investing enough in next-generation chipmaking technologies.
Specialty chipmaker LSI Logic Corp. <LSI.N> rose $1.07, or 6.7 percent, to $17.06, while Lattice Semiconductor Corp. <LSCC.O> gained $1.72, or 8.2 percent, to $22.81.
Micron Technology Inc. <MU.N>, the second-largest maker of dynamic random-access memory, or DRAM, chips, the most widely used semiconductors in personal computers, also gained, rising $3.27, or 9.8 percent, to $36.51.
Micron rival Hynix Semiconductor <00660.KS> of South Korea has raised prices three times in the past month, due to rising prices in the DRAM spot market. Hynix raised prices again on Wednesday, by an average of 30 percent for 128 megabits of memory, sending chip prices rising across the globe.
Analysts noted that, perhaps rather than indicating true demand, it was simply that the gap between contract prices and spot prices was just too wide.
Shares of PMC-Sierra Inc. <PMCS.O>, a maker of communications semiconductors, gained $2.14, or 9.4 percent, to $25. Broadcom Corp. <BRCM.O> stock gained $3.26, or 7.3 percent, to $47.70.
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