Technology stocks are treading on shaky ground despite last week’s rally, as chipmakers signal more trouble may be ahead in an industry notorious for its booms and busts.

Semiconductor shares have been tumbling amid corporate warnings about slowing demand for chips used in an array of electronic devices, such as mobile phones. The Philadelphia semiconductor index has slumped 11% over the past four weeks, underperforming the 7% decline in the Nasdaq 100, with laggards such as Nvidia Corp. hitting lows for 2022.

Investors are concerned that slowing orders that are already plaguing makers of memory chips and other components used in personal computers may spread to the rest of the semiconductor industry. Adding to those worries are Biden administration’s focus on curbing chip exports to China and a Federal Reserve bent on aggressive interest rate increases to snuff out inflation.

“There’s a palpable fear that the semiconductor cycle has begun to turn negative and demand is slowing,” said Jason Benowitz, a senior fund manager at Roosevelt Investment Group in New York. “If the downturn turns out to be deeper and longer and more broad, then we would expect technology to also underperform.”

The tech sell-off since midAugust is a reversal from two months ago when the sector led a rebound in the S&P 500 amid optimism that inflation was topping out, a scenario that traders believed would give the Fed flexibility to slow its rate increases. That optimism was squelched on Aug. 26 by Fed Chair Jerome

Powell, who used his widely watched Jackson Hole, Wyo., speech to push back against the idea that the central bank would soon reverse course.

Samsung added to concerns last week after a senior executive at the world’s largest chipmaker said the outlook for the second half of the year is gloomy and it isn’t seeing momentum for a recovery in 2023. That followed weak sales forecasts from companies such as Micron Technology Inc. and Western Digital Corp.

Semiconductors take months to go through a complicated manufacturing process, and chip buyers are acutely concerned about a recurrence of supply chain shortages that arose after the covid-19 pandemic caused demand to soar, making the industry’s orders an indicator of future demand for electronics and other goods.

Nvidia, which makes graphics processors used in personal computers and data centers, has lost more than half of its market value this year amid a rout in stocks with lofty valuations. The stock, however, remains a favorite for retail investors who have made more than $600 million in net purchases over the past two weeks, according to research firm Vanda.

Adding to the pain is the Biden administration’s moves to restrict China’s access to chipmaking equipment. The U.S. is planning to broaden curbs on its shipments of semiconductors for artificial intelligence and chipmaking tools to China, Reuters reported, citing unidentified people familiar with the matter.

The Commerce Department planned to publish new regulations based on restrictions communicated in letters to KLA Corp., Lam Research Corp. and Applied Materials Inc. The agency banned them from exporting chipmaking equipment to factories in China that produce 14-nanometer or more advanced semiconductors, unless the sellers obtain licenses, Bloomberg News reported in July.

Analysts have slashed profit estimates for semiconductor companies more than other parts of the tech sector. Earnings for chip-related companies in the S&P 500 are projected to be flat in 2023, down from expectations of 12% growth just three months ago, according to data compiled by Bloomberg Intelligence.

By contrast, profits for the broader information technology sector are projected to expand 6%, down from 11% over the same span. Bullish investors argue that most of the bad news is already priced in, creating an opportunity to buy chipmakers at depressed valuations.