Audience Inc, which makes chips used in Apple Inc's iPhones, said its top customer is unlikely to use its technology for the latest iPhone, sending Audience shares down 58 percent in extended trading.
Audience's chips improve the voice quality in mobile devices by filtering out background noise, and the company supplies these to Apple's contract manufacturers like Foxconn International Holdings Ltd and Protek Ltd.
The company also sells processors and licenses its processor intellectual property to Apple and some of its units.
However, the company now believes Apple is unlikely to use its processor IP in the iPhone 5, which is expected to be launched next week.
For Audience, Apple's licensing of this IP accounted for 37 percent of total revenue for both the three and six months ended June 30.
This action, however, will not impact Audience's third-quarter results but would affect it a quarter after Apple starts selling its next-generation mobile phones, the company said in a statement.
Audience also raised its third-quarter revenue outlook to between $35 million and $38 million from its prior forecast of between $33 million and $36 million. It expects an adjusted profit of 14 cents to 18 cents per share.
Analysts on average were expecting a profit of 11 cents per share on revenue of $34.7 million, according to Thomson Reuters I/B/E/S.
Shares of the Mountain View, California-based company, which went public in May, were down at $7.99 in trading after the bell. The stock closed at $18.86 on the Nasdaq on Thursday.
(Reporting By Aurindom Mukherjee in Bangalore; Editing by Joyjeet Das, Maju Samuel)