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China slowdown hampers Imagination

First-half loss may not be made up by expected second-half revival
September 16, 2015

The ripple effect from the slowdown in the Chinese economy is starting to show. Shares in microchip specialist Imagination Technologies (IMG) took a hit after it warned that the three-month period to the end of June 2015 was hampered by weakening sales into China and other emerging economies, which will contribute to a first-half loss.

Imagination, which supplies Apple among other electronics giants, may have suffered a double whammy from the wider slowdown and the product cycle of Apple, which has just launched an updated version of the best-selling iPhone. During the period in question, it also suffered when an unnamed customer scaled down orders of a legacy chip sooner than expected.

As with many others in the sector, Imagination's management is expecting an uptick in sales in the second half, but cannot say at this stage whether it will be sufficient to recover the first-half shortfall.