Advanced Micro Devices Inc. (AMD) predicted fourth-quarter revenue below expectations, hurt by dwindling orders for game console processors. AMD expects revenue in the fourth quarter to fall 18 percent, plus or minus 3 percent, from $1.307 billion in the previous quarter.

The net loss in the third quarter was $406 million, compared with a loss of $197 million, in the same period a year earlier.

Sales rose 23 percent to $1.31 billion. The loss was partly caused by a $340 million charge related to a change in a supplier agreement, AMD said.

"Our third quarter financial results highlight the progress we are making across our business," said Lisa Su, AMD president and CEO. "We now expect to deliver higher 2016 annual revenue based on stronger demand for AMD semi-custom solutions and Polaris GPUs. This positions us well to accelerate our growth in 2017 as we introduce new high-performance computing and graphics products."

AMD's Computing and Graphics segment revenue was $472 million for third quarter, increased 9 percent sequentially and 11 percent from Q3 2015. The sequential and year-over-year increases were driven primarily by increased sales of GPUs, offset by decreased sales of client desktop processors and chipsets. The year-over-year increase was also driven by increased sales of client mobile processors.

AMD reported Enterprise, Embedded and Semi-Custom segment revenue of $835 million increased 41 percent sequentially and 31 percent year-over-year due to higher sales of semi-custom SoCs.

While Su has made progress in gaining back orders lost to larger rivals Intel and Nvidia, her company has become increasingly dependent on orders from Sony and Microsoft for custom processors that run game consoles. As demand for the PlayStation and Xbox peak toward the end of the year, AMD’s customers have already built enough devices and inventory to meet that surge and are slowing purchases.

AMD’s Su said the decline in console chip orders was "normal for this time of year." Unlike larger rival Intel, AMD is seeing no buildup of unused parts in its PC and graphics chip business.