The executive also said the outlook for chip demand remains solid for the remainder of this year, but cautioned another cyclical downturn could be in store next year as industry capacity continues to increase.

Disappointing sales forecasts from National Semiconductor and Texas Instruments triggered the sell-off. The letdown comes just two weeks after Intel warned its sales for July through September would fall below its earlier projections.

Analog chip vendor Texas Instruments has lowered the upper end of its forecast range for third-quarter profit and sales, indicating that semiconductor demand may be slipping as economic growth slows.

Applied Materials has forecast quarterly results that beat Wall Street estimates, with demand for its chip-making gear holding up despite fears of weakening technology spending. But the company warned that sales of solar and energy equipment would slide 10-20% this quarter.

With semiconductor sales soaring to a possible 30% increase this year, companies are ramping up capacity to meet current and expected demand. But the capital invested during the balance of 2010 will not impact actual capacity until sometime in 2011.

Electronics distributor Avnet has reported record sales of US$5.21 billion for the quarter ended July 3, 2010, besting consensus analyst expectations. "The demand for electronic components remained strong across all three regions as better-than-normal sequential growth resulted in year-over-year revenue growth of 47% this quarter," said company CEO Roy Vallee.

Kyocera is ramping up its annual production to 600MW this year - an increase of 50% over the previous year - to meet growing demand in countries such as Japan, US, Germany, France and Italy, the company says.

Chip equipment maker UMS, which counts Applied Materials as its biggest client, will boost capacity utilisation to 85% in the third quarter from 65% in a booming industry.

Japan's Sharp is investing almost 4 billion yen (US$46 million) at a plant in Britain to double production of solar cell modules to meet growing demand across Europe.

Toshiba has posted its second straight quarterly profit on rising chip demand, beating analyst estimates for a loss.

Automobile demand in Japan and elsewhere has outpaced chip supplies from STMicroelectronics, a Hitachi spokesman said, adding that Nissan had not asked Hitachi for compensation for the disruption.

Germany's move comes as Italy plans a 30% cut in its FIT for next year. That could force Italian developers to build as fast as possible in the 2H10, much like German developers did in 1H. The lower drop in FIT gives manufacturers time to make a transition to markets such as the United States and Canada, which have the possibility of being larger than Europe, based on combined electricity demand and land available for development.

Applied Materials said demand for semiconductor and solar-panel manufacturing equipment in Europe is growing rapidly, a sign the region's debt crisis isn't crimping spending.

Shares of most DRAM makers have underperformed their respective benchmark indexes in Asia so far this year, as European sovereign-debt troubles surfaced and clouded views on global economic growth.

Samsung Electronics has said due to projected heavy demand for its advanced logic chips, it will invest US$3.6 billion to expand capacity at its plant in Austin, Texas, and hire 500 more workers there by 2011.

Aixtron and Veeco dominate what's known as the MOCVD market for LED applications and have been seeing strong demand amid increasing display sales for items such as TVs. But some investors have worried demand and bookings could soon weaken as the LED market sees excess supply.

The demand for medical instrumentation - combined with new and lower-cost transducers - means that analog-circuit design and interface for this market segment a growth area with lots of innovation and interesting work.

Civil aviation regulators from Taiwan and China have agreed to add 28 direct passenger flights a week between Taipei's Songshan Airport and Shanghai's Hongqiao International Airport in order to meet increasing demand for cross-straits flights, according to Taiwan's Civil Aeronautics Administration. The new flights will begin operating before June 14.

"Applied's stronger second quarter results were led by revenues and profitability gains in our silicon and FPD businesses," said Mike Splinter, chairman and CEO of Applied Materials. "Global demand for computing and consumer electronics is giving our customers the confidence to make significant capacity additions, fueling what we believe will be a multiyear growth cycle..."

Perhaps because of that history major suppliers have not been installing capacity, which indicates that prices will continue to increase until at least the last quarter of 2010, when capacity may again be able to meet demand, according to a Gartner analyst.

Micron Technology sees strong demand for computer memory this year even as major players like Samsung invest billions of dollars to increase production, according to company president Mark Durcan.

The German parliament yesterday approved long-expected cuts to solar energy incentives prompting US shares in solar companies to tumble amid fears that demand from one of the world's largest markets for soalr panels will now fall.

ARM CEO Warren East said the company was planning to hire about 100 more engineers in 2010 - the first headcount additions for four years - mainly to work on high-end processors that are used in smartphones and netbooks.

Infineon Technologies has raised its 2010 outlook for a second time this year on higher demand from automotive and industrial customers for chip cards and security applications. The chipmaker's fiscal second-quarter net income was 79 million euros (US$104.2 million) compared with net lossES of 239 million euros a year earlier.

STMicroelectronics, Europe's largest semiconductor company, swung to profits of US$57 million in the first quarter of 2010 from losses of US$541 million a year ago. First-quarter revenues rose 40% to US$2.32 billion, led particularly by demand for chips used in cars and computers.

Monthly Japanese shipments held steady in March 2010 in a sign that global demand, particularly from Asia, is still expanding, lending support to the country's export-dependent economy.

Hitachi Global Storage Technologies is poised to secure net profits for the fiscal year ended December 21, 2010, according to company president and CEO Steve Milligan. Brisk demand for PC hard drives and fixed-cost reductions will contribute to its profit outlook.

Mitsubishi Motors Corp.'s battery- making venture with GS Yuasa Corp. is considering producing lithium-ion cells in Europe as demand in the region for electric cars grows.

Japan's exports in February jumped 45.3% from a year earlier, fueled by robust global demand for cars and electronics, according to the finance ministry.

TriQuint Semiconductor, which provides chips for mobile gadgets such as Apple's iPhone, has hiked its profit forecast for the quarter, a sign that demand is improving.

Ramifications of slowed manufacturing capacity output and a lack of capital expenditure over the past 24 months, combined with increased demand driven by a hot PC market, has resulted in a very positive environment for DRAM pricing.

A JP Morgan analyst has warned of what he considers to be the first warning signs that supply may be starting to outstrip demand in the chip sector. "After a strong start to 2010 characterized by low inventory, rampant component shortages, and extended lead times, we are starting to see our first negative data points..."