The alarming speed at which the US recession is ricocheting across corporate America was laid bare last night after Intel, the world’s leading chipmaker, said it would make $1 billion (£669 million) less in the fourth quarter than it had expected.

The announcement by the world’s biggest maker of microprocessors is yet another indication of how the economic crisis is rippling across industries. As both consumers and businesses cut back on purchases, including big-ticket items such as PCs, computer makers and their suppliers are feeling the pain. Intel is the world’s largest maker of chips — the brains of personal computers — with about 80 per cent of the global market.

Intel expects sales of $9 billion in the last three months of the year, plus or minus $300 million. It previously expected sales between $10.1 billion and $10.9 billion, and analysts polled by Thomson Reuters were expecting $10.3 billion.

Intel blamed “significantly weaker than expected demand in all geographies and market segments” and PC makers buying fewer new chips as they use up existing stocks to save money.

Intel’s profit is being hurt badly. The company’s closely watched gross profit margin will now come in about 55 per cent of revenue. The previous guidance was for about 59 per cent.

Gross margin measures profit on each dollar of revenue once manufacturing costs are stripped out. It is an especially important measurement for chipmakers because upgrading and maintaining their factories is hugely expensive.

The technology sector in general is bracing itself for a prolonged slump. Cisco Systems, the world’s largest maker of computer networking gear, offered a sign of the trouble last week when it reported that orders fell off abruptly in October. As the first big technology company to report results including October, Cisco’s grim forecast suggested that other tech firms were likely to suffer significant damage to their sales as well.

More specific warning signs for the PC sector emerged last week when Lenovo, the world’s fourth-largest PC maker, reported that profits had plunged by 78 per cent.

Intel shares fell $1.13, or 8.4 per cent, in extended trading after the warning was announced. The stock had fallen 41 cents, or 2.9 per cent, to $13.52 during the regular trading session.

Intel actually had been performing well before the downturn struck. A new manufacturing process that shrinks the size of its chips’ circuitry has allowed it to wring healthy profits despite pressure on prices for those chips.

One of those pressures has been the rise of so-called netbooks, which are pint-sized PCs that are cheaper than regular laptops and are used primarily for surfing the internet.

Intel’s $2.01 billion in profit for the third quarter beat Wall Street’s expectations. At the time of the earnings release, it was optimistic about what lay ahead despite being vague on detail. Intel said that it would be difficult to forecast fourth-quarter results, but predicted steady profits.

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