Economic downturn sees Nokia shares slump

Hit by decrease in demand for pricier phones

12 March 2008 13:07 GMT / By Katie Scott

Nokia shares have been hit by an admittal by mobile phone chip manufacturer, Texas Instruments, that the demand for more expensive phones, including 3G models, has decreased.

Shares fell after Texas Instruments, which supplies chips to the mobile phone manufacturer, cut its first-quarter forecasts, citing a weaker market for chips used in phones providing high-speed internet links.

Texas Instruments published the warning after one of its key clients cut down plans for building 3G advanced phones.

And, although this "customer" wasn't named - analysts are pointing to Nokia - which has neither confirmed or denied the rumour.

"We are usually careful about comments from Nokia's supply chain, but the scale of the downgrade at Texas Instruments and the precision of the comments make us conclude that demand for Nokia's 3G/high-end phones has decreased in the second half of the quarter", said analysts from Cazenove.

Others are suggesting that Nokia may have simply over-ordered for Q1 rather than been hit with falling demand.