Applied Materials, Inc.

The U.S. semiconductor industry, notoriously volatile even without the shock of a global economic downturn, was badly hurt in 2008 as prices for memory chips continued their dizzyingly rapid fall and demand for PC microprocessors dropped off amid weaker demand.

Many of the problems facing Advanced Micro Devices Inc. are of its own making. But the limited choices the chip maker has for solving its troubles are symptoms of an affliction sweeping through Silicon Valley.

Slumping sales, big layoffs and devastated stock prices are becoming the norm, resurrecting memories of the malaise that gripped the Valley for years after the dot-com meltdown in 2000.