One after another, warnings of declining earnings from semiconductor (chip) companies such as Micron Technology and Samsung Electronics are forcing analysts to sharply revise their earnings forecasts at a faster pace than the 2008 global financial crisis. The industry has gone from prosperity to rock bottom in a year and is now bracing for a storm that is expected to hit everyone from semiconductor manufacturers to those who make their hardware as well as computer processors. The underlying Philadelphia Semiconductor Index has fallen 42% since the start of the year, marking its worst annual performance in 14 years. And this is due to a sharp drop in demand.

According to research firm Gartner, the PC market showed its biggest drop in the third quarter. Economic uncertainty and a glut of out-of-stock products hurt sales for the fourth consecutive quarter. On top of that, the outlook is bleak, as reflected in early forecasts by semiconductor manufacturing groups that are facing overstocking in their warehouses, most recently by Samsung, Micron and Advanced Micro Devices.

According to data compiled by Bloomberg news agency, the expected profit in the last quarter from July to September fell by 16%. Even tougher days lie ahead, according to Citigroup analysts, and the Philadelphia Semiconductor index will continue to weaken as the crisis deepens. “Put on a helmet because things are going to get worse,” said Citigroup analyst Christopher Dunnelly, who expects two chip makers, US-Dutch NXP Semiconductors and US Texas Instruments, to report lower orders. “We are just seeing the beginning of a downward spiral and every company in the industry will feel it.” Nvidia, whose semiconductors are a common part of high-end gaming PCs, has lost much of its market value.