Sony Ericsson has warned that first-quarter earnings could fall by more than half, with net income before tax set to be €150-200 million on shipments of 22 million devices. That compares with €362 million in the year-earlier quarter. The company’s President, Dick Komiyama, said the mobile phone market is proving to be “challenging,” especially in the “mid-to-high end replacement sector of the market in Europe, where Sony Ericsson has stronger than average market share.” Sony Ericsson is the world’s fourth largest mobile phone manufacturer, with 9% market share. Nomura analyst Richard Windsor claims the news bodes particularly badly for mobile phone manufacturers who make high-end phones for developed Western European and American markets, including Samsung and LG Electronics.

Last week chip manufacturer Texas Instruments cut its outlook. Meanwhile reports this week state Motorola is poised to cut half the staff at its design facility in Birmingham, UK, as the company tries to turn around its mobile devices division. All the 121 staff at the facility are believed to have been told Tuesday they are at risk of redundancy. Reports suggest Motorola is proposing to make half of them redundant and said it may close the site.