Infineon says memory demand recovering
By Bloomberg News
April 6, 2001, 9:40 a.m. PT
STUTTGART, Germany--Infineon Technologies, the semiconductor unit of Siemens, said demand for computer memory chips is picking up, which may signal an industry recovery.
The company sees signs that demand for dynamic random access memory chips, or DRAMs, is "on the rise," Chief Executive Ulrich Schumacher said in a speech to shareholders. Prices may increase, though "the sustainability of this early trend is not yet foreseeable."
Infineon has said it aims to focus more on chips for communications equipment and autos to offset falling demand and prices in the company's computer memory chip business. DRAMs last year made up half of Infineon's sales and 80 percent of its operating profit.
"DRAM chip prices remain key for Infineon," said Theo Kitz, an analyst at Merck Finck in Munich, who rates the shares "neutral."
Infineon, which is 71 percent owned by Siemens, went public last March and is holding its first annual general shareholders meeting this week.
Infineon reiterated that it will keep shifting its focus to chips for communications equipment and autos. While the company is seeing double-digit sales growth and operating margins of as high as 20 percent in these areas, its total profit will still be lower than last year's, Schumacher said.
Analyst have forecast that operating profit will drop to $479 million (532 million euros) in the fiscal year ending in September, from $1.5 billion the previous year, and that sales will fall to $6 billion from $6.6 billion. Schumacher said in an interview published Monday with German business daily Handelsblatt that such forecasts are realistic.
The memory chip unit lost money in the second quarter, Schumacher said. First-quarter memory chip earnings had already halved to $59 million from the year-earlier period. The unit earned $654 million in the fourth quarter. Memory chip prices have fallen to as low as $3 in recent months, while Infineon produces memory chips at $3.50 apiece.
The company will cut costs by as much as $630 million in its current fiscal year, Chief Financial Officer Peter Fischl said.
Mobile phone sales growth has been slowing as consumers delay purchases, waiting for models that allow faster Internet access. The slowdown now is being aggravated by weaker economic growth, especially in the United States. |
