SAN FRANCISCO -- Intel's ( INTC) chief executive believes the current economic turmoil is the worst in his lifetime, and Wall Street is increasingly of the mind that the chip giant will not escape the crisis unscathed.

During an interview at a technology conference in San Francisco on Thursday, Intel CEO Paul Otellini reportedly told the audience that the U.S. is in a recession that will last for two to three quarters, and that the slowdown will spread to other regions of the world.

"My sense is this is the deepest one I have seen in my lifetime," Otellini said, according to the Barron's Tech Trader Daily blog.

Shares of Intel tumbled 7.5%, or $1.13, to $13.93 in midday trading Thursday, along with a broader market decline that had the Dow Jones Industrial Average off 444 points.

Intel is the world's No.1 maker of microprocessors used in PCs and servers, with about 80% market share. That scale provides Intel with a great deal of financial stability, but it also makes it harder for Intel to avoid the trends in the overall market.

Dell ( DELL), the world's second largest PC maker and a major Intel customer, has warned that spending on technology by corporations and consumers is slowing in the U.S., Western Europe and parts of Asia.

On Wednesday, Intel's rival Advanced Micro Devices ( AMD) said that it would lay off 500 employees, or 3% of its workforce, as it seeks to lower operating expenses and return the company to profitability.

In a note to investors Thursday, American Technology Research analyst Doug Freedman reduced his sales estimate for Intel in the fourth quarter. Instead of revenue increasing 2% sequentially, Intel's revenue will be flat, Freedman said.

"Demand softness has become more pronounced as PC OEM's respond to the global credit crisis and continued lack of visibility by reducing component inventories," Freedman wrote.

Intel projected last month that its fourth-quarter revenue will range between $10.1 billion and $10.9 billion, with the low end of the range representing a sequential decline. The last time Intel had a sequential decline in the fourth-quarter was in 2000, though the decline was a relatively small $29 million. Intel's only fourth-quarter sequential decline before that occurred in 1984.

Freedman also warned that Intel's gross profit margin will be under pressure as an increasing portion of Intel's revenue comes from sales of Atom processors, designed for low-priced netbooks.

Freedman cut his price target for Intel from $19 to $18 and retained his neutral rating on the stock.

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