The company, which recently rejoined the FTSE 250, said its underperformance was down to weakness in the semi-conductor market, which is partly due to the slowing Chinese economy.
"There are some indications of general softness across the semiconductor industry for the short-term," Hossein Yassaie, chief executive of Imagination, said.
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Imagination said its second quarter results should beat its previous forecasts, but admitted it was not yet sure if this would be enough to recover all of the first half losses.
"The combination of general market softness in first half and the short-term timing impact of the replacement chip ramp up mentioned in the business update, lead us to expect lower first half revenues than we had previously forecast, which is likely to lead to a loss for first half," it said.
"Based on the strength of the licensing pipeline and customers' product launches we now expect a stronger second half than previously forecast. However, at this early stage of the year, we cannot be certain that we will recover all of the first half shortfall."