Infineon Off To A New Start
OCTOBER 30, 1999 Electronic Buyers News
StockTalk: Semiconductors: Infineon Technologies
As Infineon Technologies AG preps for its initial public offering early next year, the chip maker plans to slug it out in DRAMs and build on an already strong foundation in communications and automotive chips.
more DRAM capacity!, when will these guys learn?
The company, which spun off from Siemens AG last spring, is among the first to produce DRAMs on a 300-mm-wafer pilot line, has gained share and status in the memory market, and leads in other fast-growing sectors.
clever idea!, be the first and pay for R&D for the rest of the industry! if it was such a good move Intel would have done it.....
Although executives at Infineon are playing it close to the vest about its financial performance and business strategies, they believe they are off to a good start.
hey, they keep telling the European government they are loosing money on DRAM, some good start!
"We've been averaging about 20% revenue increases across-the-board on most of our major product segments," executive vice president of sales and marketing Peter Bauer said during a recent visit to the United States.
In its midyear measurement of market share in the worldwide chip industry, Scottsdale, Ariz.-based IC Insights Inc. said Infineon moved up to eighth place from 10th last year.
Market trackers count Infineon's manufacturing and product strength among the company's most valuable assets.
"Its technology is good," said analyst Malcolm Thompson at Future Horizons, Kent, England. "Its manufacturing is strong. And its cost structure is healthy."
Future Horizons who the hell are they! what do they know
Infineon, Munich, Germany, chalked up revenue of $3.8 billion in fiscal 1998 and $2.3 billion in the first half of fiscal 1999, which ended March 31.
A formidable force on its home continent and worldwide, the chip maker derives 62% of its revenue from Europe and 38% from other regions.
most of the "home" revenue comes from germany and from one company Siemens - sounds like captive sales..
Although Infineon's largest market is analog ICs (mostly for communications applications), the company's memory business is its fastest-growing, according to Future Horizons.
so its been Infineon who have been flooding the market with unwanted product..
Infineon's memory sales accounted for 21% of its 1998 sales, but that percentage was depressed due to ferocious pricing pressure in DRAMs last year. In fact, price increases in recent weeks ratcheted the memory portion of Infineon's sales to nearly 40%, although the company is aiming to keep that figure close to 30% so that it can maintain a healthy balance of less-volatile businesses.
no company can resist DRAM when the times are good, anyway Siemens said they were pulling out of the DRAM market a few years ago...
DRAM edge Infineon can compete effectively with the top three DRAM giants and keep its 10% global share, Bauer said.
Analysts confirm that Infineon's stake in DRAMs is close to that level, which is up from about 7% last year.
Although Hyundai Micro Electronics Co., Micron Technology Inc., and Samsung Electronics Co. Ltd. have each captured about 20% DRAM market share, Infineon's leading-edge fabs make it highly cost-competitive against the larger DRAM producers, Bauer said.
no company can beat Micron!...anyway today's leading edge fabs are tomorrows loss makers...
But don't expect Infineon to rest easy. The company continues to hone its competitive edge.
In last year's acquisition flurry of DRAM producers-with Micron buying Texas Instruments' memory business and Hyundai and LG Semicon merging-Infineon debated whether it needed to find its own memory partner. But the DRAM maker is now confident that it is well-positioned without a memory alliance.
"We can capitalize on the massive investment we made in existing fabs" to be a dominant player in the DRAM market, Bauer said.
B.S.!
Infineon's DRAM fabs are using 0.21- or 0.18-micron technology, and by next year all its memory fabs are expected to be on a 0.18-micron process, which Bauer hails as one of the industry's most aggressive die-shrink efforts.
Analysts cited the cost and manufacturing efficiencies of the Semiconductor 300 pilot line, the fruits of a joint venture between Infineon and Motorola Inc.
Infineon has started limited production of 64-Mbit DRAMs for the commercial market on the 300-mm line in Dresden, Germany. Semiconductor 300 is running on a 0.2-micron process, and when Infineon shifts to 0.17 micron in the future, it will use a 256-Mbit DRAM as the test device.
There is enough space in the 300-mm-wafer production area to expand; Infineon doesn't need to make a decision about building a new 300-mm fab for some time, Bauer said.
The Semiconductor 300 development line will continue to produce DRAM wafers only-even though Motorola has exited that market, Bauer said.
I'm sure the rest of the industry is pleased that Siemens have paid for all the R&D, now they only have to place orders with the equipment suppliers..
Infineon continues to bank heavily on its non-memory businesses such as communications, smart cards, and automotive.
Telecom semiconductors account for about 35% of the company's total revenue, with sales in that sector growing more than 20% annually, and sales of devices for wireless products increasing even faster, according to Bauer.
"We're the largest ISDN-chip producer in Europe," he said. "ISDN is having a second boom in Europe to provide high-speed Internet access to homes and businesses. Half our Regensburg [Germany] fab is devoted to making ISDN chips."
Tapping other data-transmission technologies, Infineon is working with major telecom companies to develop devices to address a new DSL standard under consideration in Europe to transmit data at 30 Mbits/s.
Infineon is the No. 1 supplier of chips to select wireline applications such as ISDN, SDSL, and VDSL, company president Ulrich Schumacher said at an industry gathering sponsored by Future Horizons last month.
The company also considers itself No. 1 in RF devices aimed at wireless-communications applications.
Already a leader in RF chips for current-generation CDMA handsets, Infineon is developing RF chips and semiconductors for base stations for third-generation systems, Bauer said.
The company also claims to be in first place in smart-card products. Bauer estimates that Infineon has a roughly 40% stake in the $500 million market.
"However, it is very competitive," he said. "Two main [focuses] are an embedded EEPROM and security chips for prepaid telecom cards and microcontroller chips for credit cards. We expect the smart-card chip market to continue at a 33% compound annual growth rate."
Infineon is the second-largest semiconductor supplier, after Motorola, to the automotive market. Automotive-electronic chips account for 25% of the company's semiconductor sales.
"We hold 70% share in the European automotive market, but we're beginning to pick up sales slowly in North America," Bauer said. "Infineon is able to gain new customers by becoming a second source."
Additional growth drivers Infineon continues to expand its role in embedded DRAM, which comes under the aegis of ASICs and fits in with the company's system-on-a-chip focus.
One fast-growing application is a single integrated graphics chip with embedded DRAM. The PC graphics-chip market, however, is under tremendous price pressure, and rising DRAM prices could affect the cost of embedded DRAMs.
"If we can keep DRAM prices stable, this should fuel big growth in embedded DRAMs," Bauer said.
Demand from the consumer-electronics market, especially in Europe, is also increasing Infineon's embedded-DRAM sales. These devices provide graphics in TV sets-for Internet-access set-top boxes as well as "picture within a picture" on the screen.
A third major embedded-DRAM market is controllers for computer peripherals, especially integrated microcontrollers for mass-storage devices.
What's the biggest challenge for the company that already claims leadership on several fronts?
"Executing the IPO will be their biggest challenge," Future Horizon's Thompson said. "They will have to learn to stand on their own two feet. They haven't done so before. ... But they're well-positioned."
no more Siemens Bank to fund all this expansion, they will have to make money now! |
