A week after Sharp announced a lower profit forecast on the back of crumbling mobile phone sales in Japan, rival NEC has done the same too, emphasising just how weak the market is there.

The saturated Japanese phone market, as well as poor chip sales, led NEC to announce yesterday that it was taking an axe to its previous profit forecast and lopping off almost 30 per cent.

Future uncertain

Shareholders will now have to be content with a projected ¥120 billion (£736 million) for the year to March 2009.This comes not long after NEC's separate semiconductor arm slashed 90 per cent from its forecast in a shock move.

NEC remains the fifth biggest phone maker in Japan but its position is sure to come under scrutiny as networks rein in spending and keep handset prices as low as possible to encourage more customer 'churn' in the stagnant market in Japan.