Semiconductor Winners & Losers: Infineon

NEW YORK -- Semiconductor stocks fell sharply Monday, as the broader market plunged on confirmation that the nation is in a recession and as an industry group said chip sales slumped in October.

The Philadelphia Semiconductor Sector index was down 7.8%. The Semiconductor Industry Association said global chip sales were down 2.4% 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% decline in PC sales and a 9% decline in cell phone sales. Together, cell phones and PCs account for 60% of chip sales.

Memory-chip makers are already facing a glut of inventory and drastically lower prices. Qimonda AG (QI Quote), majority owned by Infineon Technologies AG (IFX Quote), 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 6 cents to 13 cents.

Shares of Infineon fell 28 cents, or 11.9%, to $2.07, and Micron Technology (MU Quote), a large U.S.-based memory-chip maker, lost 50 cents, or 18%, to $2.24. Industry bellwether Intel (INTC Quote) declined $1.24, or 9%, to $12.56.

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 670 points and erasing a huge chunk of last week's big gains. All the major indices fell more than 7%.