Chip Equipment Makers’ Shares Up

Shares of semiconductor equipment makers jumped Monday after Novellus Systems Inc., a leading maker of automated wafer manufacturing systems used to make computer chips, said last week its business was booming.

Stocks in the sector also benefited from signs that Intel Corp., the world’s leading chip maker, has begun awarding contracts for chip production equipment it needs to produce a new generation of silicon wafers.

The rally sent the Philadelphia semiconductor index of 16 stocks up 4.4% Monday.

Novellus, which on Friday announced a 3-for-1 stock split and said earnings in the latest quarter will beat estimates, soared $28.38 to $113.56 on Nasdaq.

Industry bellwether Applied Materials Inc. gained $5.56 to $116.31, Lam Research Corp. zoomed $16.94 to $106.50, and KLA-Tencor Corp. rose $4.13 to $100.69, all on Nasdaq.

Merrill Lynch analyst Mark Fitzgerald said Intel has begun placing orders with chip equipment vendors for tools to make a new generation of 300-millimeter silicon wafers that will replace the current generation of 200mm technology.

“We believe Applied Materials and Novellus are the big beneficiaries,” Fitzgerald said in a note to clients, referring to Intel’s selection of providers of new chemical vapor deposition tools used to etch transistors onto silicon wafers.