Imagination Technologies Group Share News (IMG)

* Downgrades shipment and licensing expectations

* Shares fall 8 pct

By Paul Sandle

LONDON, March 6 (Reuters) - Imagination Technologies has downgraded its forecast for shipments of chips containingits graphics and video technology because of lower than expectedsales of top-end smartphones.

Shares in the British group, the technology of which is usedin Apple's iPhone, fell to a three-week low after itupdated the market on Thursday. They were trading down 8.3percent at 172.2 pence by 1222 GMT, the biggest faller on themid-cap index.

FinnCap analyst Lorne Daniel said the future looksincreasingly bleak for Imagination, which is competing againstbigger rivals such as ARM, Qualcomm, Intel and Nvidia.

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

Imagination said it expected its partners to ship between520 million and 550 million units this year, excluding theimpact of its acquisition of MIPS technology in 2012, down fromits previous forecast of 580-630 million.

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

In the short term, however, it also downgraded expectationsfor licensing revenue for the year to Apr. 30 to between 35million pounds and 40 million pounds ($59-67 million), from38-43 million pounds, to reflect the timing of deals in itsfinal quarter.