Weak business in China draws skid marks into Infineon's figures

February 05, 2019 // By Christoph Hammerschmidt
Lower revenue, higher profit, bleak outlook: these are the key points of Infineon's current quarterly results. As a consequence, the company intends to reduce its investments moderately, but to continue the construction of a clean room for 300 mm wafers as planned.

The semiconductor manufacturer reports sales of € 1970 million for the first quarter of its 2019 fiscal year, 4 % less than in the previous quarter. Consolidated net income, on the other hand, increased by €80 million to €254 million. However, what appears to be a fat increase is due to a one-time effect - last year Infineon had had to make provisions in connection with the insolvency of its former subsidiary Qimonda; during the first quarter, this effect applied no longer.

Market observers attribute the decline in sales to weaker demand from China, especially in the smartphone segment. But even the automotive market did not perform as well as usual. As a result, Group CEO Reinhard Ploss spoke of a "more difficult environment" and a "headwind from the market". However, the structural growth drivers remain intact in the medium and long term, he pointed out. For the 2019 financial year, Ploss anticipates sales growth of around 9%, the lower end of the previously forecast growth figures. Business with customers from the automotive industry will continue to grow at an above-average rate. Infineon's Power Management & Multimarket division will exhibit below-average growth, and revenues in the Digital Security segment will even decline by a low to mid single-digit percentage. According to Infineon, this is due to the difficult market situation in this segment.

Against this background, Ploss intends to reduce the company's investments by €100 to €200 million to €1.5 billion. The planned construction of a 300 mm wafer production facility for power semiconductors in Villach, Austria, is not affected by this, explained the Infineon boss.

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