Imagination Technologies has lost more than 3% on concerns the chip designer could be losing market share.
In a note repeating their underperform rating and cutting their target price from 275p to 235p, analysts at Credit Suisse said:
Based on our view that Imagination is likely to continue losing graphics share in the smartphone market, along with limited success with [subsidiary] MIPS on apps processors, we lower our revenue and earnings per share estimates by 2%-3% for both 2015 and 2016.
MediaTek (second largest customer for Imagination with around 10% of group revenues) yesterday announced the launch of its new octa-core chip MT6592, featuring 8 Arm Cortex-A7 processors along with Arm Mali-450 graphics. Historically, Imagination has been the sole supplier for graphics to MediaTek, but we believe this is the third smartphone chip announced by MediaTek in last 6 months, which is using Arm's Mali graphics. Combining this with slowing volume growth for iPhone, we believe that Imagination's smartphone graphics share will decline from around 40% in 2013 to around 32% by 2015.
Imagination is 8.3p lower at 253.7p.
