Chip maker Cypress Semiconductor Corp. (NASDAQ: CY) cut its guidance Tuesday morning, citing greater-than-expected weakness in the market for mobile handset revenues. The cut is having a negative effect on other chipmakers as well.

Cypress now expects revenue of $184 million to $187 million in its third quarter, sharply below the consensus estimate of $204.7 million. The company’s estimate for adjusted earnings per share (EPS) has been lowered to $0.10 to $0.12, again sharply below a consensus estimate of $0.17. The company did forecast higher-than-anticipated gross margins, but volumes are the problem.

The company expects the weakness to continue into the fourth quarter as well, although it provided no specific guidance. The current consensus estimates call for fourth-quarter EPS of $0.20 on revenues of $207.33 million. Those estimates are sure to be lowered in the near future.

The impact of Cypress’s announcement has hit shares of Atmel Corp. (NASDAQ: ATML), Broadcom Corp. (NASDAQ: BRCM) and Qualcomm Inc. (NASDAQ: QCOM). These chipmakers are considerably larger than Cypress and therefore less likely to be hurt badly by a drop-off in the mobile market. The Market Vectors Semiconductor ETF (NYSEMKT: SMH) is up fractionally this morning.

Shares of Cypress are down nearly 12.5% in the first hour of trading Tuesday morning, at $10.02 in a 52-week range of $8.70 to $13.23.

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