(Bloomberg) -- Semiconductor stocks tumbled after Micron Technology Inc. became the latest chipmaker this week to sound the alarm over a slowdown in demand.
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The Philadelphia semiconductor index sank nearly 6% on Tuesday with all 30 members in the red. The decline was the worst in three weeks as investors fled the sector on mounting fears that chipmakers are heading into what could be a prolonged sales slump after years in which customers couldn't get enough of their products.
Semiconductor stocks have been a major drag on the broader Nasdaq 100 Stock Index after a string of disappointing financial results and forecasts from chipmakers including Nvidia Corp. and Advanced Micro Devices Inc. The benchmark rallied nearly 20% from a June low before memory and hard disk drive maker Western Digital Corp. helped fuel a selloff in the wake of a weak sales forecast on Aug. 5. The Nasdaq 100 has fallen for three straight days since.
"It appears to be a challenging market for everyone after both Nvidia and Micron had to slash their outlooks," said Edward Moya, senior market analyst with Oanda.
Makers of equipment used in the production of chips were among the biggest decliners on Tuesday after Micron said it plans to reduce spending on new plants and equipment in response to a drop off in orders. Lam Research Corp. fell more than 10%, while Applied Materials sank 8.8%.
Of the 10 worst performing stocks in the Nasdaq 100 this month, seven are chip stocks. Marvell Technology Inc. is down 8.8%, followed by Lam Research and NXP Semiconducors. The semiconductor index has fallen 28% this year, compared with a drop of 20% for the Nasdaq 100 and 14% for the S&P 500.
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