Microchip Technology ( MCHP) boosted its bottom line 26% in the third quarter but said it was taking various steps to help it weather a souring business climate.

The Chandler, Ariz., chipmaker said it will shut down its factories for two weeks in order to reduce its inventory and said that it would implement "reductions in discretionary and variable costs."

Sales in the current quarter will be down between 8% and 16% sequentially, which translates to a range of $226.5 million and $248.1 million.

The average analyst expectation called for fourth-quarter sales of $273.3 million, according to Thomson Reuters.

"Global economic conditions are creating significant difficulties in the market, as consumers and businesses deal with liquidity and credit concerns," said CEO Steve Sanghi in a statement, noting that determining demand levels is "extremely challenging."

Shares of Microchip were off 12 cents at $21.40 in extended trading Thursday.

Microchip is the latest in a string of chipmakers to forecast declining sales in the fourth quarter. Texas Instruments ( TXN) said sales will be down 9.4% to 16.5% sequentially, while Intersil ( ISIL) projected a 20% to 25% decrease.

In the three months ended Sept. 30, Microchip posted net income of $76.5 million, or 41 cents a share, in line with analyst expectations. At this time last year, Microchip's net income was $60.6 million, or 27 cents a share.

The company said that sales of its 16-bit microcontrollers jumped about 17% sequentially in the third quarter, vs. the product's 5% growth in the second quarter.

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