Wolfson Microelectronics, the Scottish micorchip maker, today announced a sharp downturn in orders, leading to a 25 per cent drop in the share price.

The Edinburgh-based company, which makes chips for products including Apple’s iPhone, said it had experienced a “material reduction” in orders.

A supply glut and fears of a sharp downturn in spending on electronic goods in the run-up to Christmas have hit many chipmakers.

Wolfson shares dipped to 77p — their lowest level since flotation in 2003.

The group said that it expects fourth-quarter revenue to be between $45 million and $50 million (£28.3 million), compared with previous expectations of $58.87 million.

Last month, David Shrigley, Wolfson's chief executive, announced he was stepping down for family reasons and returning to the United States.

He is to be replaced at the end of the year by Mike Hickey, a multimedia specialist from Motorola.

It was the latest boardroom reshuffle at the company after Wolfson appointed Michael Ruettgers, former head of EMC, last November to take over as chairman and provide “a fresh, external perspective” to the board’s leadership.

Wolfson floated in 2003 but in the past year the company’s shares have lost more than half of their value.

The group has been hit by the loss in March of a contract with Apple to supply parts to its iPod Touch and iPod Nano devices, which resulted in its shares slumping 26 per cent.

At the end of July, Mr Shrigley warned the economic slowdown was taking its toll. He said: “While we expect a third-quarter seasonal uptick in trading, the weaker macro environment is impacting our customer order patterns.”

Analysts at brokerage Panmure Gordon cut their share price target for Wolfson from 120p to 100p but maintained their “hold” rating on the stock.

“Market conditions combined with negative newsflow should continue to result in the stock trading well below fundamental value,” analyst Nick James said.

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