Technology group Carclo said it expects its touch sensor division to show only modest revenue growth next year following stiff competition from rivals.
Analysts said the group is facing very strong competition and price pressure from Asian rivals such as O-Film and FujiFilm.
The Ossett-based company has seen slower than expected sales of XSense, the touchscreen sensors launched by Carclo’s US business partner Atmel.
Carclo believes that its touchscreen technology – CIT – can transform the $10bn market for mobile phone and tablet computer touch screens.
The technology allows developers to make larger, lighter, less power-hungry, sleeker designs for smartphones, tablets and other products.
Carclo hopes that its new technology will be launched across a range of household name mobile phones and tablets over the next few months.
But yesterday the group said the market for touch sensors is proving more competitive than was initially expected and selling prices have fallen to half the level seen in previous years.
Asian competition is also strong.
Carclo’s chief executive Chris Malley said: “Whilst the announcement of the third HP programme and the collaboration with Corning are both good news for CIT’s Touch business, building volume business has been more difficult than expected and we have recent confirmation from our partner that several anticipated programmes have not yet been awarded.
“Based on current levels of demand we anticipate that volume growth, tempered by the effect of lower prices, will give a modest overall increase in sales revenue from our CIT Touch materials business for 2015.”
He added that predicting the rate of adoption of the XSense product is very difficult.
“The business may develop more rapidly than we are now forecasting and, should that happen, our manufacturing capacity remains capable of dealing with such growth,” he said.
Elsewhere in the group, Mr Malley said the technical plastics division is set to grow well in the new financial year, benefiting particularly from new work for its US and Czech businesses.
“Our LED technologies division will see substantial growth from additional supercar lighting programmes with sales and profits likely to be materially higher than in the prior year,” he added.
“Overall, we expect a strong year-on-year improvement in trading performance despite the reduction in previously anticipated sales at CIT.”
Carclo will announce its preliminary results on June 10.
Analysts at Liberum said in a note: “Competition and price pressure from Asian suppliers like O-Film and FujiFilm remains very strong and Atmel has not been awarded many of the programmes that were previously awarded.
“While demand may pick up in the future, visibility remains low. Carclo’s other businesses continue to perform well, especially LED technologies.”