The economic slump will take a big bite out of quarterly revenues for Intel, the world's biggest computer chip maker, the company said Wednesday.

The California giant was expected to report fourth-quarter revenue of around 8.2 billion dollars, down 20 percent from the prior quarter and down 23 percent year over year.

This is lower than the company's previous forecast on November 12, "as a result of further weakness in end demand and inventory reductions by its customers in the global PC supply chain."

Intel said its gross margin for the quarter is at the bottom of the previous forecast of 55 percent, "plus or minus a couple of points."

The company will also cut spending on research and other initiatives to 2.6 billion dollars from 2.8 billion.

Intel shares slumped 5.8 percent to 14.48 dollars in opening trade in New York.

Intel reported profit of 2.0 billion dollars in the third-quarter of 2008, on revenues of 10.2 billion.