Helsinki: Sony Ericsson sparked fresh fear of crumbling consumer demand when the world's No 4 handset maker said it would sell barely half of the phones it sold last quarter.

Sony Ericsson said it expects to sell just 14 million phones in January-March, hit by weak demand and retailers cutting their inventories. Analysts polled by Reuters in January expected between 15.5 million to 21.8 million phones sold.

"Investors are questioning the whole market now, even though I think the issue for Sony Ericsson is more company specific," said Jari Honko, analyst with eQ Bank.

Overnight, U.S. rival Palm Inc reported a widening loss for the December-February quarter and said revenue sank 70 percent from a year ago.

The cellphone industry has entered its toughest year ever as consumers rein in spending and retailers try to clear inventories of unsold phones after bleak Christmas sales.

"The market, overall, continues to be very challenging," said Gartner analyst Carolina Milanesi.

Fears over the future of the mobile market also sent shares in chipmakers sharply lower, with Infineon down 6.6 percent and STMicro 5 percent lower. 

Source : Reuters