Chipmaker Onsemi(ON.O) forecast a tepid fourth quarter and cut about 900 jobs, sparking fears that weak electric vehicle (EV) demand has begun to hurt orders for its chips from the auto sector and sending its shares tumbling 18.3% on Monday.

The company, whose clients include European automaker Volkswagen (VOWG_p.DE), supplies chips that go into drive trains of electric cars and help with driver-assistance systems like cameras and sensors.

"We are starting to see pockets of softness, with tier 1 customers in Europe working through their inventory and increasing risk to automotive demand due to high interest rates," CEO Hassane El-Khoury said in a post-earnings call.

Tesla (TSLA.O) CEO Elon Musk had raised concerns about the impact of high interest rates on car buyers after the world's most valuable automaker, which is also considered a bellwether for EV industry, missed revenue estimates.

Onsemi, which has laid off 1,360 employees so far this year, forecast revenue of $1.95 billion to $2.05 billion, below expectations of $2.18 billion.

In an interview, El-Khoury said the company still expects EV demand to grow, but more slowly. The job cuts announced Monday had been planned as part of a larger strategy shift to internally manufacture its more profitable chips and save costs by outsourcing other chips.

"The timing of it seems like it's a reaction to the macro (economic environment), but the timing has always been part of the strategy," El-Khoury said.

Onsemi expects fourth-quarter adjusted diluted earnings per share of $1.13 to $1.27, below analysts' average estimate of $1.36 according to LSEG data.

Its third-quarter revenue of $2.18 billion inched past expectations of $2.15 billion. Adjusted earnings of $1.39 per share beat estimates of $1.34.

Summit Insights Group analyst Kinngai Chan downgraded the company's shares to hold from buy.

"Our industry checks indicate continued worsening of order rates in the auto and the industrial end-markets," Chan said.

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