Chip stocks fell down another rung Monday, as a slew of Wall Street reports warned of worsening business conditions. With one week to go until semiconductor firms begin reporting third-quarter financial results, and the financial crisis showing no signs of abating in the wake of the $700 billion U.S. rescue package, analysts said that expectations for chip companies are too high. In a note to investors Monday, Citigroup chip analysts Craig Ellis cited "snowballing signs of softness" and wrote that chip orders are "freezing up." "We remain extremely concerned with the global growth picture and its impact on chip demand through calendar year 2009," Ellis wrote. Ellis said he expects chip company's fourth-quarter forecasts to modestly miss analyst expectations. But he said he was now troubled by the duration of revenue weakness and profit margin "de-leveraging" beyond the first quarter of 2009. Ellis downgraded Fairchild Semiconductor ( FCS) and RF Micro Devices ( RFMD) to Sell ratings, and lowered Intersil ( ISIL) from a Buy rating to a Hold. Shares of Fairchild, RFMD and Intersil were down 6%, 8.9% and 5.4% respectively in midday trading Monday. The Philadelphia Stock Exchange Semiconductor Sector Index , an index of 18 large semiconductor stocks, was off 5.7% Monday, vs. a 6.7% decline in the Nasdaq. JP Morgan analyst Chris Danely said that the PC market -- which accounts for about 40% of the world's total chip sales -- is finally feeling the effects of the global economic slowdown. "Our checks across the PC food chain indicate that demand is finally deteriorating due to the global economic slowdown," Danely wrote in a note to investors Monday, citing weakness among in the Taiwanese notebook and PC motherboard sector.