Can Semiconductor ETFs Weather the Storm?

A semiconductor industry group has released its sales forecasts for 2009, and the results leave some question as to what the impact might be on ETFs. Meanwhile, one big player in the industry is moving to diversify.

According to The Semiconductor Association, chip sales are expected to drop 21% this year, as the demand is a result of slow business. Consumer related business is down, leaving several quarters of production in chip sales flat, explains Tess Stynes for The Wall Street Journal.

The industry group now expects 2009 sales of $195.6 billion for the year, not the $248.6 billion seen seven months ago. Meanwhile, Intel (INTC) is trying to build a software business, as they agreed to buy Wind River Systems Inc. for $884 million, says Don Clark for The Wall Street Journal.

This transaction will allow Intel to enter the software market. Intel, whose chips serve as calculating engines in computers, has been trying to use a low-end chip called Atom to move into pocket-sized devices, consumer electronics gear as well as embedded applications. Software is a key part of that strategy.

• SPDR S&P Semiconductor (XSD): up 40.2% year-to-date

• PowerShares Dynamic Semiconductors (PSI): up 16.7% year-to-date

• iShares S&P North American Tech Semiconductors (IGW): up 30% year-to-date