Chipmaker Nvidia Corp (NVDA. O) on Wednesday slashed its second-quarter sales outlook, citing increased costs for memory and economic weakness in Europe and China, and its shares fell 6.6 percent.

Nvidia blamed its lowered expectations on increases in the cost of memory, a vital component of their products, and economic weakness in the European and Chinese markets. Some customers were moving to lower cost graphics chips, which eats into the company's revenue, or buying computers with less expensive products from competitors.

The company said it now expects revenue of $800 million to $820 million in the quarter ending August 1, down from its May 13 estimate of $950 million to $970 million.

Wedbush Securities analyst Patrick Wang said Nvidia's problems are specific to the graphics chip business and its product lines. He said demand has been weak for Nvidia's new Fermi product.

The revenue warning comes just a day after Apple Inc. (AAPL) offered more bad news for Nvidia. On Tuesday, the Cupertino, Calif., consumer-electronics giant released a new version of its flagship desktop computer, the iMac, which now relies only on graphics cards made by competitor Advanced Micro Devices Inc. (AMD).

Wang said that "I don't think they're out of the woods yet. I think it will take another quarter or two of cleaning up, and I don't think the stock starts working again until later this year."

Nvidia, which made the declaration after the close of trading, announced that it wouldn't clarify the renewed forecast before its second-quarter earnings report, which is planned for Aug. 12.