Infineon issues profit warning

Dollar doldrums

channel

Infineon expects first quarter revenues and earnings to fall below market expectations. In a profit warning yesterday, the German chipmaker blames client inventory build-up, which aggravated by the sharp decline of the US dollar.

The German chipmaker now anticipates earnings before tax and interest of €211m and revenues of approximately €1.82bn. This includes €118m from the settlement of a licence dispute with ProMOS, the company's former Taiwanese partner.

The profit warning follows hot on the heels of the collapse of the sale of its fibre-optic business to Finisar early this week and the sentencing of four of its executives for their part in a price fixing scheme in the DRAM (Dynamic Random Access Memory) chip market in December. Infineon was also ordered to pay a $160m fine for its role in stabilising DRAM chip prices. It may be forced to make additional payments to hardware makers who were affected by the price fixing.

The announcement also signals turbulence within the European semiconductor market which has been reeling from the weakness of the US dollar. On Monday, STMicroelectronics, Europe's biggest chipmaker, said its fourth quarter revenues were likely to come in at the higher end of its previous guidance, although gross margins would probably be lower than expected.

The Franco-Italian company forecast net revenues for the three months to 31 December of $2.3bn, 4.3 per cent higher than the previous quarter and at the high end of an earlier forecast. Gross margins are expected to come in at around 36.6 per cent, well behind its earlier guidance range of 38 percent to 39 per cent.

© ENN

Sponsored: How to determine if cloud backup is right for your servers