Shares digital

Profit warnings from leading chip firms ARM Holdings (ARM) and Texas Instruments (TXN:NYSE) had already alerted investors to a possible slowdown in global sales of mobile phones. Last week’s disappointing trading update from Sony Ericsson, the world’s fourth largest handset maker, confirmed this weakness and all eyes are now on the first quarter results due from global mobile phone leader Nokia (NOK:NYSE) on April 17.

ARM’s chief executive Warren East blamed the chip designer’s February profit warning on an uncertain economic environment and poor visibility with regards to the broader semiconductor cycle for the chip designer’s woes. Texas Instruments cited slack demand for 3G phones shortly afterwards. ARM’s shares held firm following the Sony Ericsson announcement at 83.25p, their lowest level since summer 2004.

Shares says: The chip stocks have already done badly but it’s too early to pick them up. Hold ARM, CSR. Avoid Wolfson Micro.

HOLD ARM, CSR

AVOID WOLFSON MICRO