'Soft' market will make Imagination's profits droop, warns firm

British chipmaking biz Imagination Technologies has posted a profit warning for its next financial quarter, blaming "softness" in the chip market.

"The semiconductor sector in general had a weak June quarter but the industry expectation is for this to improve in the second half of the year," it said in its interim update for the period from 1 May 2015 to 15 September 2015.

"The combination of general market softness in H1 [the first half of the financial year] and the short-term timing impact of the replacement chip ramp up mentioned in the business update, lead us to expect lower H1 revenues than we had previously forecast, which is likely to lead to a loss for H1," said the company.

Part of this has been driven by the sharp slowdown in the rate of growth of the emerging economies, and in particular the Chinese market, it said.

Last year Imagination posted revenue of £177m, up from £170.8m a year earlier. However, losses increased to £12m, up from £314,000.

The company said it was more optimistic about the second half of the year, but added that it “cannot be certain” it will be able to recover all of the shortfall from the first six months.

Hossein Yassaie, Imagination's chief executive, said: "Given the relevance of our technologies to the key markets and design-wins we have already secured and expect to secure, we remain confident of a growing momentum in our business in the medium-term." ®