Imagination Technologies has downgraded its forecast for shipments of chips containing its graphics and video technology because of lower than expected sales of top-end smartphones.

Shares in the British group, the technology of which is used in Apple's iPhone, fell to a three-week low after it updated the market on Thursday. They were trading down 8.3 percent at 172.2 pence by 1222 GMT (7:22 ET), the biggest faller on the mid-cap index.

FinnCap analyst Lorne Daniel said the future looks increasingly bleak for Imagination, which is competing against bigger rivals such as ARM, Qualcomm, Intel and Nvidia.

"Our real concern is that we only see the scenario deteriorating further as Imagination lacks the cash and scale to match its key rivals in ferociously competitive CPU and GPU(central and graphics processing) markets," she said.

Imagination said it expected its partners to ship between 520 million and 550 million units this year, excluding the impact of its acquisition of MIPS technology in 2012, down from its previous forecast of 580-630 million.

The company said it has not been helped by its lower market share in cheaper smartphones, which has been the best-performing part of the market, but it hopes to gain share in that segment in the latter part of its next financial year.

In the short term, however, it also downgraded expectations for licensing revenue for the year to Apr. 30 to between 35 million pounds and 40 million pounds ($59-67 million), from 38-43 million pounds, to reflect the timing of deals in its final quarter. ($1 = 0.5977 British Pounds)

By: DocMemory
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