NEW YORK (AP) -- Shares in chip makers fell Monday after analysts warned that an expected recovery in 2009 may be muted as businesses and consumers pull back on spending amid the larger economic slowdown.
Major players such as Intel Corp., Advanced Micro Devices Inc. and Broadcom Corp. shed about 2 percent in afternoon trading.
ThinkPanmure analyst Vijay Rakesh said the analog chip sector is starting to see the effects of a global economic and consumer slowdown.
"We believe the 'speed' of the global consumer slowdown in accelerating," he said in a note to clients on Monday.
The observation came after Diodes Inc. warned Friday that its third-quarter earnings would drop by as much as 32 percent from a year ago. The company makes components for electronics and computing products.
Its shares extended Friday's decline, losing 72 cents, or 4 percent, to $17.69 in afternoon trading after touching a 52-week low of $16.99.
"Key takeaways from the Diodes conference call include a more-pronounced slowdown since August in Europe versus prior expectations and Asia-Pacific," Rakesh said.
He also said pricing for chips is declining in the consumer electronics and computing sectors as demand is flat or lower than earlier this year.
Meanwhile, Goldman Sachs analyst James Covello said he still expects the semiconductor sector to recover in 2009, but that the gains will be more "conservative" than originally thought.
"We believe that the weak macro environment could continue to weigh on business conditions for the next several months," he said in a note to clients late Sunday.
He said Broadcom Corp. is an example of a company that is now cautious because of the slowing economy, but added that it will still grow faster than the rest of the industry next year.
Broadcom shares slipped 45 cents, or 2 percent, to $21.70.