Taiwan Semiconductor Manufacturing Co. (TSMC) revised down its fourth-quarter sales guidance as customers slashed chip orders amid "continuing weakness in global economic conditions," the company said in a statement.

The world's largest contract chip maker now expects fourth-quarter sales to reach between NT$63 billion and NT$65 billion (US$1.89 billion to US$1.95 billion), down from its previous forecast of NT$69 billion to NT$71 billion.

The NT$6 billion (US$180.3 million) reduction is significant because it shows business conditions in the chip industry continue to worsen. TSMC is considered a bellwether for the global IT industry because it manufactures chips for such a wide variety of gadgets. Chip companies from Advanced Micro Devices (AMD) in graphics and Qualcomm and Texas Instruments in mobile phones farm out chip production to TSMC.

TSMC's original fourth-quarter guidance already showed a significant drop in sales compared to the same time last year, NT$93.86 billion, and a sharp drop off in business compared to the third quarter of this year, when its sales were NT$92.98 billion.

TSMC also cut its fourth-quarter gross profit margin estimate to between 30 percent and 32 percent, down 4 percentage points from previous guidance.

The IDG News Service is a Network World affiliate.