Increasing pressure on margins and a shift in the production cycles of mobile devices has caused the firm to lower full-year forecasts to £50m. That's down from the previous outlook of £75m after what it described as a "very challenging" trading performance in the third quarter.
Shares plunged nearly 50 per cent to around 160 pence per share in early trading.
Revenue for the quarter to the end of September ticked up 29 per cent to £207m, however on an organic and constant currency basis that was down four per cent.
"We are very disappointed by these adverse developments in the mobile devices market for our Performance Materials division, at a time when other parts of the business continue to perform well. We are confident that the actions we have taken will stabilise and improve the business," said chief executive Tony Quinlan.
"Moving into 2017, the work to improve our operating model is progressing well and we are on track to deliver the associated significant financial benefits. This, together with the Novero turnaround, as well as the positive momentum in our automotive business, will improve performance next year and beyond."
The smartphone market has experienced sluggish growth this year. The development of eye-catching features has plateaued making it harder for rival smartphone makers to create that "must-have" demand among consumers.
The western market has reached saturation point and growth is slowing after years of runaway sales, leading many analysts to call "peak smartphone".