Updated from 7:50 a.m. ET

Sound familiar?

Texas Instruments

(TXN) - Get Report

this morning warned of lower-than-expected revenue in the first quarter. It cited the woes of the season: weakening demand, higher inventories and a limited visibility to predict its future given soft economic conditions.

This is the second time in about a month the chipmaker has lowered expectations for the first quarter.

The market caught on quickly. Shares of Texas Instruments were off 2.5% to $29.4 in preopen trading on

Instinet

, an electronic brokerage where investors can get in their trades before the opening bell.

The Dallas-based semiconductor maker said first-quarter revenue will drop about 20% compared to the fourth quarter, down from its earlier estimate of a 10% decline. According to earnings tracker

First Call/Thomson Financial

, analysts on average have been expecting first-quarter revenue of $3.3 billion, compared with $2.7 billion in the year-ago period and $3.0 billion in the fourth quarter.

Last month, Texas Instruments said it earned 31 cents a share in the third quarter -- results that were lower than the 33-cent-a-share result analysts anticipated. At the time of the earnings release, the company lowered its outlook for the first quarter.

Texas Instruments, the company said in a release this morning, "initially experienced a sharp downturn in its markets late in the fourth quarter of 2000, as its customers reacted to weakening demand and higher inventories. Market conditions have not improved during the quarter and customers have continued to cancel or reschedule backlog, causing visibility to remain limited."

It also cut capital spending plans for 2001 to $2 billion, a 30 percent reduction from last year's $2.8 billion outlay. This is another piece of bad news for tech companies that are reeling from the downturn among many tech companies to spend less than planned on beefing up their own technology and infrastructure.

Texas Instruments also said it started a cost-reduction plan to limit the impact of its reduced revenue on profitability. Its measures include the temporary idling of manufacturing facilities and shortening workweeks in some areas. It instituted a temporary freeze on hiring and a voluntary retirement program.

Merrill Lynch's

Joe Osha became the first analyst this morning to respond to Texas Instrument's lowered outlook.

Osha cut his investment rating on the company to intermediate-term accumulate from buy, as well as his full-year 2001 earnings-per-share estimate to a range of 95 cents to $1, down from $1.11. Osha also cut his first-quarter earnings-per-share estimate to 14 cents from 21 cents, citing his concern that "low-end demand could cause a reaccumulation of inventories" for the first and second quarters.

"In addition, over the course of the last week and a half, we have been unable to identify any signs of an upturn in TXN's analog semiconductor business," Osha wrote. He said he believes an earnings recovery for the company will not occur until the second half of 2001.

Nevertheless, Osha maintained his long-term buy rating on Texas Instruments, calling it "the highest quality company in its space."

Motorola

(MOT)

, the telecommunications company that also makes semiconductors, on Friday

lowered its estimates for semiconductor growth and for the cellular phones that use those chips.

TheStreet.com's

Caroline Humer took a look at the

problems facing the chip sector.