Sector Snap: Gloomy sales report hurts chip stocks

The Philadelphia Semiconductor Sector index was down 5.2 percent. The Semiconductor Industry Association said global chip sales were down 2.4 percent in October from a year ago, mainly due to falling prices for memory chips.

The SIA expects the worldwide financial crisis to continue to hold back demand for chips next year. It forecasts a 5 percent decline in PC sales and a 9 percent decline in cell phone sales. Together, cell phones and PCs account for 60 percent of chip sales.

Memory-chip makers are already facing a glut of inventory and drastically lower prices. Qimonda AG, majority owned by Infineon Technologies AG, said Monday it may face bankruptcy if it fails to find new investors or the cash needed to operate in the coming weeks. But it also reported progress in talks with potential investors. Qimonda's U.S. shares lost 5 cents to 13 cents.

Shares of Infineon fell 26 cents, or 11 percent, to $2.09, and Micron Technology Inc., a large U.S.-based memory-chip maker, lost 38 cents, or 14 percent, to $2.36. Industry bellwether Intel Corp. declined 87 cents, or 6.4 percent, to $12.93.

Meanwhile, confirmation that the nation is in a recession and signs pointing to a prolonged downturn sent Wall Street plunging once again Monday, hurtling the Dow Jones industrials down more than 460 points and erasing a huge chunk of last week's big gains. All the major indexes fell more than 5 percent.