Infineon: Weak automotive business, but positive outlook

February 05, 2020 //By Christoph Hammerschmidt
Infineon: Weak automotive business, but positive outlook
In the first quarter of its fiscal year, chip manufacturer Infineon had to accept a slight decline in sales, as predicted. Also the takeover of Cypress is taking longer than planned. However, CEO Reinhard Ploss is maintaining his forecast for the year as a whole.

It was to be expected that the weak automotive economy would also leave a dent in Infineon's business with semiconductors for the automotive market. Against this background, the automotive supplier Bosch recently reported a massive drop in profits. Infineon generates more than 40 % of its sales with customers in the worldwide automotive market. Sales in this segment fell by 7% compared to the previous quarter; compared to the prior-year quarter, the decline was 2%.

The Industrial Power Control (IPC) segment also suffered from weak demand, with revenues in this segment down 8%, even more than in the automotive business. Net income even decreased by 17% to 210 million euros. However, since at the same time the operating margin of 15.5% was better than expected due to various cost-cutting measures, profit was also higher than analysts had expected – in average, they had only expected 190 million euros.

CEO Reinhard Ploss spoke of continuing difficult market conditions. However, savings and special effects would have made the result better than expected. For the next quarter Ploss expects a 5% increase in revenues. Ploss sees positive developments in individual market segments such as silicon microphones and power components for servers. The company is therefore largely sticking to its forecast for the year as a whole.

However, the planned takeover of the US chip manufacturer Cypress is still delayed. The deal was actually expected to be concluded by the end of 2019, after the European competition authorities had given the go-ahead months ago. The approval of the US authorities is still pending. Infineon now expects their approval at the end of the current or the beginning of the next calendar quarter.

Related articles:

Auto slump causes Bosch profits to collapse

Takeover to strenghten Infineon's radar chip development

Infineon meets expectations in “difficult market environment”

 


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