Sector Snap: Semiconductos stocks climb

The chip sector, as measured by the Philadelphia Semiconductor Index, rose 3.02 points to 406.02.

Citi analyst Glen Yeung wrote in a note that networking company Cisco Systems has begun using Intel microprocessor chips for its router and network switch products.

Yeung said it was a small contract but he saw an opportunity for Intel to gain new ground in the communications processor business.

Cisco is particularly significant as it made up $250 million of the $960 million communications processor business in 2007, Yeung said, adding that he is comfortable with Intel's aggressive second-quarter guidance.

Shares of Santa Clara, Calif.-based Intel rose 17 cents to $23.81 in midday trading.

There was also relief for Intel following the earthquake that hit western China Monday.

The damage is likely to have only limited impact on major microchip production in the area, Oppenheimer analyst Rick Schafer said in an investor note.

Schafer said that the epicenter was roughly 65 miles from Chengdu, where Intel Corp. and Monolithic Power Systems Inc. have major manufacturing and testing facilities.

Both companies report that their buildings and equipment remain undamaged. Intel's Chengdu plant is the fifth largest facility the company maintains worldwide, Schafer said.

Shares in San Jose, Calif.-based Monolithic Power added 4 cents to $24.01.

In other news, Citi analyst Craig A. Ellis was upbeat about memory chip maker SanDisk Corp., commenting in an analyst note that the company was "moving into the seasonal sweet spot." He also said that through October, he anticipates catalysts that could support an increase in his earnings-per-share estimates.

Shares in Milpitas, Calif.-based SanDisk rose $1.13, or 3.9 percent, to $30.40. Shares have traded in the last 12 months between $19.54 and $59.75.