Exchange traded funds that invest in semiconductor and chip stocks lost more than 3% in Tuesday’s mixed overall market due to weakness in top holdings Novellus (NasdaqGS: NVLS), Texas Instruments (NYSE: TXN), Applied Materials (NasdaqGS: AMAT) and Intel (NasdaqGS: INTC).

The chip sector fell sharply Tuesday after Microchip Technology (NasdaqGS: MCHP) cut its profit outlook.

The company cited several reasons for the warning, including an “inventory correction” after the Japan earthquake and broad-based weak demand across a number of key segments, said analysts at Collins Stewart in a note Tuesday.

Microchip Technology “anticipates the weak demand trends that it has seen will also broadly impact the semiconductor industry in the June/September quarter,” they wrote. “Microchip indicated that it saw weak demand trends across all major geographies including U.S., Europe  and China.”

Semiconductor HOLDRS (AMEX: SMH) and SPDR S&P Semiconductor ETF (NYSEArca: XSD) fell more than 3% on Tuesday. [ETF Spotlight: Semiconductors]

Conversely, real estate ETFs were solid performers Tuesday as investors searching for yield and income moved into the sector. SPDR Dow Jones REIT ETF (NYSEArca: RWR) gained over 1%.