Koninklijke Philips Electronics NV said Thursday that sales at its semiconductor division are expected to drop by about 18 percent in the third quarter ending Sept. 30, from the second quarter.
In July Philips had forecast the sequential fall in sales to stay in the high single digits. The outlook had to be adjusted because of the slump in demand for semiconductors, Philips said.
"As an industry we have witnessed the most significant downturn in history," said Philips Semiconductors BV Chief Executive Officer (CEO) Scott McGregor in a statement.
There is some light at the end of the tunnel, although that could turn out to be only the traditional Christmas season jump, Philips said. Inventory reductions appear to be coming to an end and order intake is improving, the Dutch electronics maker said.
Philips Semiconductors is in the process of reducing its headcount by about 4,000 people. The company, which saw sales drop 19 percent in the second quarter compared with the year-earlier period, plans to take a 110 million euro (US$102 million) charge for restructuring costs.
Other semiconductor makers, including Texas Instruments Inc. and Intel Corp., are also battling a drop in demand. STMicroelectronics NV (ST), Europe's largest chipmaker, on Monday confirmed it is in the process of eliminating 2,500 jobs through attrition and layoffs.
Philips Semiconductors, headquartered in Eindhoven, Netherlands, makes chips for consumer electronics, telecommunication, automotive, computer peripherals and networking products. The company employs over 35,000 people in more than 50 countries.
Shares in Philips (PHI.AMS) were down 7 percent at 18.53 euros in mid-afternoon trading on the Amsterdam stock exchange.