Affymetrix's ( AFFX) biotech chip business is looking just as dicey as the chip business dominated by Intel ( INTC).

Shares in Affymetrix tumbled $14.94, or about 36%, to $26.01 Tuesday after the company warned Monday night of a large drop-off in sales of its gene chips used in the drug discovery process. The problem? Big customers, in this case large pharmaceutical companies, were delaying orders.

Sounds familiar, huh? Intel and other chipmakers have encountered tough times in recent months because customers have put their wallets in a corporate lockbox. In contrast, biotech is booming, but certain companies within the sector seem less immune to short-term economic woes than industry observers once believed.

In the first quarter, it was Applied Biosystems ( ABI) and Molecular Devices ( MDCC), both of which make research instruments used to analyze genetic material, which took their turns at the head of the earnings-warning table.

Now it's Affymetrix's turn. The Santa Clara, Calif.-based company said it expects to post a net loss of $4 million to $7 million in the second quarter, excluding noncash charges. Based on 57.6 million shares outstanding, that puts the company's loss at 6 cents to 12 cents a share. Wall Street was looking for a net loss of 1 cent a share, according to Multex.com.

Revenue for the quarter is expected to reach $44 million to $50 million, the company said, compared with Wall Street's consensus estimate of $58.1 million.

On Tuesday, analysts went back to their chalkboards to revise their numbers and issue a flurry of downgrades. But the news wasn't all bad. Most see Affymetrix struggling with a sales slowdown for the next few quarters, but rebounding in the long term because the company holds a dominant position in the gene-chip business.

"I don't believe that large pharmaceutical companies can afford to hold back on this kind of drug research," says Scott Greenstone, an analyst with Thomas Weisel Partners, adding that he feels this is a short-term hiccup fueled by industry consolidation. Drugmakers are stepping back momentarily while they combine and reorganize drug research efforts.

Last week, Greenstone upgraded Affymetrix to a strong buy from a buy. Greenstone now has downgraded the stock back to buy and reduced his estimates. (Greenstone's firm hasn't done underwriting for Affymetrix.)

Tuesday's big selloff suggests that investors aren't satisfied to wait for an eventual Affymetrix recovery. And at this point, company executives aren't offering much specific guidance for when sales will start picking up. On a Monday night conference call, they said business conditions are not expected to get worse, but that sales could be sporadic for the next two or three quarters.

This lack of visibility weighed heavily on the downgrade by Robertson Stephens analyst Mike King, who dropped Affymetrix to a market perform from a buy. In his research note, King explains that "while Affymetrix remains the dominant player in the gene-chip business, we believe shares in Affymetrix will be dead money until the visibility of the upturn in chip and instrument sales becomes more apparent later this year." (King's firm hasn't done underwriting for Affymetrix.)

Similar downgrades came Tuesday from A.G. Edwards, Dain Rauscher, Banc of America Securities and Gruntal. (None of the firms have done underwriting for Affymetrix.)

So far, it's hard to tell whether Affymetrix's illness is contagious to other biotech research equipment makers because none have issued statements about second-quarter results. Credit Suisse First Boston analyst Meirav Chovav did take a proactive step Tuesday with Applied Biosystems, lowering her earnings estimates for the company's fiscal fourth quarter, which ends June 30. She cited weak demand for DNA-sequence analysis equipment. (CSFB has done underwriting for Applied.)

Shares of Applied Biosystems fell $1.28, or 4.2%, to $29.09 Tuesday. Meanwhile, Molecular Devices fell 2.8%, Bruker Daltonics ( BDAL) climbed 7.9% and Waters ( WAT - Get Report) was down 7.4%.