The semiconductor sector and exchange traded funds (ETFs) got a boost early today after a brokerage upgrade.

Banc of America Securities said a modest inventory buildup in the sector has eased, leading to an upgrade. On that news, semiconductor ETFs were up by as much as 3.3% midday. Intel Corp (INTC) shares leaped nearly 4%, injecting a bit of life into all three major U.S. stock indexes.

The sector hasn’t had an easy time of it this year. Beginning late last year, there was an overcapacity that slowed down chip makers and squeezed their margins. Weakened demand has hurt the sector, but it would seem that the overcapacity has been absorbed.

Semiconductor-focused ETFs include:

• iShares S&P GSTI Semiconductor Index (IGW), down 12.8% year-to-date
• PowerShares Dyname Semiconductors Portfolio (PSI), down 8.6% year-to-date
• SPDR S&P Semiconductor (XSD), down 11.4% year-to-date
• Merrill Lynch Semiconductor HOLDRs (SMH), down 8.2% year-to-date

Tags: Sector ETFs, Technology