A bad month is getting worse for U.S. and European semiconductor stocks.

While the sector has been one of the biggest casualties of the escalation of trade tensions between the U.S. and China, news on Monday that some Huawei Technologies Co. suppliers are said to have halted shipments to the Chinese company sent chipmakers plummeting. The Philadelphia Semiconductor index fell as much as 3.3% in New York, its biggest drop in a week, while in Europe, the Stoxx 600 Technology Index slid 3%.

Lumentum Holdings Inc. fell as much as 5% after cutting its forecast for the current quarter as a result of stopping all shipments to Huawei. The company said in a statement that it cannot predict when shipments will resume. Peer Inphi Corp., another maker of optical components used in mobile phones, dropped as much as 5.3% before paring declines. Inphi gets about 14% of its revenue from Huawei, according to Bloomberg supply-chain data.

Infineon Technologies AG -- one of Europe’s largest chipmakers -- said the majority of products it delivers to Huawei are not subject to U.S. restrictions and that it can “make adaptions in our international supply chain.” The shares fell as much as 6.1%. AMS AG sank 15% even after saying it also hasn’t suspended shipments to the Chinese company.

Monday’s moves add to declines at the end of last week after the White House blacklisted Huawei and threatened to cut it off from buying U.S. products. The Philadelphia Semiconductor Index has fallen 13% this month, a dramatic reversal from a 12% rally in April. Industry heavyweights Qualcomm Inc. and Broadcom Inc. fell more than 5% on Monday. Xilinx Inc., Micron Technology Inc., Skyworks Solutions Inc., Qorvo Inc. and Analog Devices Inc. also tumbled. All five were highlighted by Morgan Stanley last week as stocks that may see their sales at risk from the Huawei ban.

Adding to woes for chip stocks on Monday, Morgan Stanley analysts including Joseph Moore and Craig Hettenbach wrote that semiconductor investors should reduce their positions, with a prolonged re-escalation of U.S.-China trade tensions not yet discounted by the U.S. equity market, even after recent declines.

“We continue to see very high inventories on semiconductor balance sheets and in the channel, weak end demand in nearly every semiconductor end market, a once-in-a-generation magnitude of memory oversupply, and capital spending that hasn’t adjusted enough to feel comfortable with all of that.”