(Reuters) -Chipmaker Onsemi 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 20% on Monday.

The company, whose clients include European automaker Volkswagen, supplies chips that go into drive trains of electric cars, as well as those that 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's 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.

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

It expects fourth-quarter adjusted diluted earnings per share in the range 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.

(Reporting by Juby Babu in Bengaluru; Editing by Arun Koyyur)