(Reuters) – Microchip Technology on Monday forecast a further drop in its third-quarter revenue, citing lower shipment levels and a weak economy.

Shares of the company fell 4.1% in trading after the bell.

The company now sees revenue for the quarter ended December to be down about 22% sequentially, compared to its previous outlook of a decline of 15%-20%.

“The weakening economic environment that our customers and distributors faced during the December quarter resulted in many of them wanting to receive a lower level of shipments as they took actions to further de-risk their inventory positions,” CEO Ganesh Moorthy said in a statement.

The U.S. Commerce Department said last week that it plans to award Microchip $162 million in government grants to step up U.S. production of semiconductors and microcontroller units (MCUs) key to the consumer and defense industries.

The Chandler, Arizona-based company said it would provide additional information when it reports its third-quarter results on Feb.1.

(This story has been refiled to remove an incorrect picture)

(Reporting by Harshita Mary Varghese; Editing by Shailesh Kuber)