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Morgan Stanley chip analyst Mark Lipacis this morning advised investors to take profits in chip stocks after a 30% move in the SOX since the chip index bottomed last month.

“We think the magnitude of the down cycle and liquidity crisis will delay an inventory depletion and replenishment in the supply chain,” he wrote in a research note. Not only that, but Lipacis today cut hits estimates and price targets for chip companies across the board.

PMC-Sierra (PMCS) this morning cut its Q4 revenue guidance to a range of $118 million to $122 million, down from a previous forecast of $125 million to $135 million. The chip maker said the revision reflects “slower sales activity within the quarter due to a weaker macroeconomic environment.”

PMCS today nonetheless is up 15 cents, or 3.9%, to $3.96.

Wall Street’s semiconductor analysts are at it again this morning: cutting their estimates on many of the industry’s largest players. Today’s reductions come ahead of two key pieces of news coming this afternoon: an earnings report from National Semiconductor (NSM) and a mid-quarter update from Texas Instruments (TXN). There are widespread expectations that both companies will have grim commentary on the state of the industry.

Here’s a roundup of some of today’s cuts:

It’s time for semiconductor investors to play defense, according to Morgan Stanley’s Mark Lipacis.

This morning, Lipacis noted that days of inventory at both OEMs and distributors moved higher in the September quarter; in particular he notes that communications equipment OEMs have about 20% higher inventory than normal, while distributor inventories remain “above normal levels.” His advice is to move into semis with “more defensive characteristics.”

PMC-Sierra (PMCS) shares are up sharply today after Goldman Sachs chip analyst James Schneider upped his rating on the share to Buy from Neutral.