UPDATE 1-MEMC sees softness in chip demand, backs Q3 rev outlook

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Sept 2 (Reuters) - MEMC Electronic Materials Inc (WFR.N) reiterated its third-quarter revenue outlook, but said there was an increased softness in demand from semiconductor applications customers, mainly due to their inventory-reduction initiatives.

The company, which supplies silicon wafers to the chip and solar industries, said it may face "unanticipated events" which could affect its polysilicon production output.

MEMC, which competes with Japan's Sumco Corp (3436.T) and Shin-Etsu Handotai, has been experiencing manufacturing issues for the past one year. Last quarter, it was hurt by disruptions at two of its facilities.

For the third quarter, the company still expects revenue of $560 million to $620 million and gross margin of 54 percent to 55 percent.

Analysts on average were expecting revenue of $601.3 million, according to Reuters Estimates.

Shares of the company, whose customers include South Korea's Samsung (005930.KS) and China's Yingli Green Energy (YGE.N), were down 3 percent at $45.60 in after-hours trading. They closed at $47.10 Tuesday on the New York Stock Exchange. (Reporting by Purwa Naveen Raman in Bangalore; Editing by Vinu Pilakkott)