Chip stocks sold off again Tuesday with havens within the battered semiconductor industry disappearing as the effects of a supply glut spread following a years-long shortage. The PHLX Semiconductor Index
SOX,
-2.50%
fell nearly 4% Tuesday to close at a loss of 2.5% to close at 2,218.49, its lowest finish since Oct. 2, 2020, dragged down by shares of its largest component by market cap. U.S. shares of Taiwan Semiconductor Manufacturing Co.
TSM,
-5.92%,
which fell as much as 7% to finish down 5.9% at $63.45, following a Digitimes report that customers are already beginning to cancel slots.
Chip stocks started their overall dive Friday, with the SOX index down 12% since the announcement of widened restrictions on what U.S. chip makers can sell to China, potentially disrupting non-U.S. parts of the sector that may have manufacturing sites in China. Read: Chip stocks crushed to two-year low as more tech, AI ban to China add to woes Chip stocks have dropped nearly 44% collectively in 2022, putting them on a dangerous trajectory with nearly three months left in the year. The worst years on the SOX index were 2002 and 2008, when it finished the year down 44.6% and 48%, respectively, according to FactSet data. And there could be more shoes to drop for the chip industry. While much of the downturn has landed on the shoulders of big-name companies focused on consumer electronics — including Nvidia Corp.
NVDA,
-0.72%,
Intel Corp.
INTC,
-0.63%,
and Advanced Micro Devices Inc.
AMD,
-0.31%
— investors have found safety in other sectors that have not fallen off, but at least one analyst thinks those safe havens could be growing dangers as well. In a Tuesday note titled “Analog Party Over,” Citi Research analyst Christopher Danley cut his estimates on Texas Instruments Inc.
TXN,
-2.13%,
NXP Semiconductors NV
NXPI,
-2.54%,
and Microchip Technology Inc.
MCHP,
-2.74%.
Danley said he favors Analog Devices Inc.
ADI,
-1.49%,
which was one of the first analog chip makers to indicate weaker-than-expected demand. Until recently, analog chips, or those lower-tech microprocessors that a …