The semiconductor downturn has forced Telemetrix, parent of UK chipmaker Zetex, to issue a profit warning.
Dr Colin Gaskell, chairman, announced the company's downgrade for expectations in his statement to the company's annual general meeting on Friday (27 April).
"We now deem it prudent to assume that the pronounced slowdown in activity in the semiconductor industry will have a negative impact on Zetex for longer than we anticipated," he said.
"As a result, we currently expect group pre-goodwill opeating profits for 2001 to be below those reported last year."
For its full year 2000, Telemetrix had operating profit of £12.5m, up sharply on 1999's £8.85m.
Dr Gaskell added that in addition to the inventory correction that has hit numerous technology markets, there was evidence that Zetex's clients were working to ever shorter lead times and that orders had not held up to expected levels.
The chairman also said that Telemetrix was pushing out its forecast for an improvement in current chip trading conditions to the fourth quarter of year "at the earliest".
Telemetrix had previously warned that Zetex was suffering a sales crunch, like most other semiconductor companies. However, at that time, it held to the consensus that chips would enter an upturn in the second half of the year.
The company did, however, have some good news for shareholders - and, perhaps surprisingly, it came from its operations in the communications market.
Dr Gaskell said that Telemetrix's test subsidiary, Trend, was set for "very strong growth in sales and profit in the current year" thanks to its products serving the ATM, ADSL and SDH/Sonet sectors.
"We expect to achieve a satisfactory level of profitability in the current year and remain confident in the medium and longer term prospects for Telemetrix," he concluded.