AMD sinks 14% on revenue warning amid weak PC demand

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Advanced Micro Devices became the latest victim of the sluggish PC market Friday, after the chipmaker warned that third-quarter revenue could decline 10% from the previous quarter.

AMD's shares tumbled 14% following the warning.

The gloomy projection comes as the company faces "weaker than expected demand across all product lines caused by the challenging macroeconomic environment," and is far worse than what the company's management was originally expecting. In July, AMD said it expected revenue to fall about 1% during the third quarter.

In particular, weak demand for personal computers has been weighing on companies like AMD (AMD) and rival chipmaker Intel (INTC), which cut its third-quarter sales forecast last month.

Shipments of PCs are on pace to fall this year for the first time since the dot-com bust of 2001, according to a new forecast from IHS iSuppli, as a growing number of consumers flock to to tablets, most notably Apple's (AAPL) iPad.

Amid the lackluster sales environment, shares of AMD, Intel as well as PC makers Dell (DELL) and Hewlett-Packard (HPQ) have been under pressure throughout the year.

But hopes are high that Microsoft's (MSFT) Windows 8, which goes on sale Oct. 26, could spark some holiday buying and help the PC industry.

Both AMD and Intel are on tap to open their books next week.