Chip stocks are plunging this month as investors react to surging interest rates and concerns over weakening business trends in the semiconductor industry.

The iShares PHLX Semiconductor ETF has declined nearly 5 percent this month through Tuesday versus a 1 percent fall for the S&P 500. The chip sector ETF closed down another 4.4 percent Wednesday.

Several chip stocks are down much more than the sector. Shares of AMD are down about 17 percent month to date, while Nvidia's stock is down nearly 10 percent.

Earlier this week, Raymond James reduced its 2019 earnings estimates for eight chip stocks, predicting companies will announce weakness in business activity. After spending a week in Asia talking to chip supply chain companies, the firm also downgraded several semiconductor stocks in late September, saying the sector has entered a "cyclical downturn."