Sony Ericsson's chief executive Bert Nordberg has hinted that the company is working on games-oriented smartphone.

Mr. Nordberg said in an interview that he was well aware of swirling speculations that the firm was working on a smartphone with a slide-out controller to allow users play video games.

Hinting on the rumoured device, Mr. Nordberg said, "There's a lot of smoke, and I tell you there must be a fire somewhere."

The potential device would take advantage of Sony's expertise in producing the PlayStation Portable video-game handheld device. Sony Ericsson's chief said it would be interesting as Sony has a strong offering in the worldwide gaming market.

Another source informed on the condition of anonymity that the phone would carry company's Xperia brand.

The potential phone has already started being called the Sony PlayStation phone, but Mr. Nordberg made no comment about it.

Portable gaming devices, like that of Sony's PlayStation Portable, have been facing serious threat from the growing attractiveness of simple games available on smartphones.