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It’s been a tough week for chip stocks. On Monday, Nvidia had warned its revenues would be well below its guidance as gaming revenue slowed. Then Micron cut its current-quarter revenue and warned of negative free cash flow for the quarter as customer inventories pile up amid weakening demand for chips used in PCs and smartphones.

Micron (MU) shares fell nearly 4%, while Nvidia (NVDA) shares fell another 4% after losing 8% the day before. The Micron warning also rattled other chip and chip-related stocks. Lam Research (LRCX), Applied Materials (AMAT), and KLA (KLAC) shares fell over 7%.

Micron said fourth quarter revenue is likely to come in at or below the low end of the company’s prior forecast. Its earlier range of $6.8 billion to $7.6 billion had fallen short of analyst targets in June. The company also warned it could see significant sequential declines in revenue and margins in the first quarter due to a fall in shipments.

The news came as Micron announced a $40 billion investment in memory chip manufacturing in the U.S. and President Biden signed the CHIPS Act into law. The law includes $52 billion in subsidies for chip manufacturing and research, and roughly $24 billion in investment tax credits for chip plants.

“Semiconductor stocks, as a whole, have been broadly underperforming the whole market, as investors come to terms with the fact that chip demand, especially for data centers and the smartphone market, is likely to decline next year. That’s prompting chipmakers like Micron to pull back on capital expenditures next year to improve profitability, while relying on government grants to ramp up production,” said Caleb Silver, Editor-in-Chief of Investopedia.

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