Sector Snap: Semiconductors tumble

The Philadelphia Semiconductor Sector index tumbled 15.07, or 4.2 percent, to 346.82 in late morning trading as the broader market also declined.

Shares of Texas Instruments Inc. fell $3.83, or 13 percent, to $24.69, their lowest level since 2005. The company posted second-quarter earnings below Wall Street's expectations, hurt by weak sales of cell phone chips and a June slowdown of orders from distributors.

Citi Investment Research analyst Glen Yeung called the quarter's results and guidance, which was also below expectations, disappointing.

"While the short-term outlook for TI has been worse than our fears, the shares have fallen precipitously," Yeung wrote in a note to investors. He added that downside to the stock is now limited. He called the stock "uncommonly attractive for longer-term investors" and reiterated a "Buy" rating.

Shares of SanDisk, which makes memory chips, sank $4.28, or 24 percent, to $13.65, their lowest level since 2003.

The company posted a second-quarter loss, well below the expectations of Wall Street analysts, who had predicted a profit. SanDisk also said it plans to reduce future capital expenses and inventory growth by delaying investments in certain chip factories.

Citi Investment Research analyst Craig A. Ellis said the company has no clear path to profitability and downgraded its stock to "Sell" from "Hold."

The quarter's results, he noted, were a "huge miss," and said just "as bad," the company's on-hand inventory rose 15 percent. The analyst said SanDisk's on-hand inventory is expected to build up further in the third quarter, possibly risking fourth-quarter results.

Chairman and Chief Executive Eli Harari said during a conference call with analysts he is "disappointed with our second-quarter results, which are clearly not satisfactory."