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What's happening
Shares of NXP Semiconductors (NASDAQ:NXPI) were among the hardest-hit in a broad semiconductor stock sell-off today after Microchip Technology (NASDAQ:MCHP) executives warned of a looming correction for the sector.

Why it's happening
NXP is one of more than a dozen major chipmakers to be hit hard by Microchip's announcement, although its stock has been one of the hardest-hit in a field that includes several other Motley Fool favorites:

MCHP Price Chart

MCHP Price data by YCharts.

Microchip has developed a reputation as something of a canary in the silicon mine, and its executives certainly played to that reputation in a preliminary earnings report released after Thursday's closing bell. Microchip CEO Steve Sanghi warned that the company "often sees the turn of the industry ahead of others ... [because] we report sales from distribution on a sell-through basis worldwide. ... We believe that another industry correction has begun and that this correction will be seen more broadly across the industry in the near future."

In response to the warning, analysts at FBR Capital took a more defensive stance in the semiconductor space, but nonetheless reiterated their buy rating on NXP's shares. Hedgeye was the only notable analyst firm to warn on NXP specifically following Microchip's report, cautioning that it is among those "downside risk stocks" that could suffer from the high beta that previously made it a strong outperformer. NXP itself has yet to release a statement on this development.

Alex Planes owns shares of Intel. The Motley Fool recommends Intel, Apple, and NXP Semiconductors. The Motley Fool owns shares of Intel, Apple, and Skyworks Solutions. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.