NEW YORK (Associated Press) - An analyst downgraded semiconductor equipment maker Applied Materials Inc. on Friday, saying orders from chip makers such as Samsung appear to be falling.

Citi analyst Brian K. Lee downgraded Applied Materials to "Hold" from "Buy" and cut his price target to $20 from $25. The new target implies a return of 9 percent from Thursday's close of $18.34.

Lee said recent checks indicate orders for semiconductor equipment makers are declining between 5 percent and 10 percent in the third quarter. Orders came in at the low end of guidance ranges during the previous quarter, he said.

Samsung, in particular, has "significantly downsized" its orders for the second half of 2008, he said, as part of a shift in its production methods.

Lee noted that shares of Applied Materials have outperformed an index of semiconductor companies by 25 percent since November. He cautioned that gap may soon close.

A representative from the Santa Clara, Calif.-based company could not immediately be reached for comment early Friday.

In afternoon trading, shares of Applied Materials fell 66 cents, or 3.6 percent, to $17.68.

Lee also removed rival KLA-Tencor Corp. from his "Top Picks Live" list, citing a lack of near-term catalysts for the stock. He kept his rating at "Buy."

He also cut his price targets on semiconductor equipment firms Novellus Systems Inc., LAM Research Corp. and Advanced Energy Industries Inc.