SUNNYVALE, Calif. (

TheStreet

) --

AMD's

(AMD) - Get Report

third-quarter sales will be below its original forecast, the company warned Wednesday, citing manufacturing issues that limited supplies of its Llano chip.

The no.2 chipmaker released its preliminary third-quarter results after market close, with revenue expected to increase 4% to 6% year-over-year, well below its prior forecast of 8% to 12% growth.

AMD released preliminary third-quarter results after market close on Wednesday.

AMD also lowered its gross margin prediction to between 44% and 45% from its prior forecast of around 47%.

The

Intel

(INTC) - Get Report

rival blamed its lowered numbers on yield, ramp and manufacturing issues at a GLOBALFOUNDRIES factory in Dresden, Germany that limited supply of its 32-nanometer 'Llano' chip.

"Additionally, 45 nanometer supply was less than expected due to complexities related to the use of common tools across both technology nodes," explained the chip specialist, in a statement. "AMD continues to work closely with its key partner GLOBALFOUNDRIES to improve 32 nanometer yield performance in order to satisfy strong demand for AMD products."

AMD blamed its lowered gross margin on weak Llano supply and "associated products" with higher average selling prices. Shipments of the company's new Interlagos server chip also occurred later in the quarter than anticipated, it said.

Investors baulked at AMD's cuts, driving its stock down in extended trading. The company's shares tumbled 58 cents, or 9.43%, to $5.57 on volume of 1,807,487, according to

Nasdaq.com

.

--

Written by James Rogers in New York

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