Shares in Imagination Technologies (IMG) sank more than 8 per cent after the microchip designer slashed its full-year forecasts. It lowered its licensing-sales estimate by about 7 per cent to £35m-40m, and its expected chip shipments, excluding those of its MIPS processors, by over 10 per cent to 520-550m. This was the third warning in 12 months from the company, which licenses out its graphics chip and processor designs to companies such as Apple and Samsung, then collects royalties for every chip shipped.
Imagination blamed the continued slowdown in the growth of the top-end smartphone market, along with a decline in its share of the low end - it has been battling with larger rivals such as Arm (ARM), Qualcomm and Intel. It did make some gains, though. Its average royalty rate is ahead of expectations, and management believes licensing sales will improve this year. They also hope that recent design wins and product launches will help it reclaim market share in the second half of 2015.