Forecast lowered

German chip giant Infineon launches savings program

Infineon Austria employs 5461 people - the majority of whom work at the production site in Villach.

(Bild: Infineon)

The German chip manufacturer Infineon, which is represented in Austria with a chip plant in Villach, is cutting its forecast due to the continuing weakness in demand and is launching a cost-cutting program. According to information published on Tuesday, the company is now only expecting sales of 15.1 billion euros for the current financial year (until the end of September) - plus or minus 400 million euros. This is 900 million euros less than predicted a quarter ago.

The segment result margin is also likely to be lower than expected three months ago at around 20 percent. Infineon CEO Jochen Hanebeck said that the reduction of semiconductor inventories at customers and distributors is continuing and that growth in the automotive business is slowing down.

Targets already cut in February
The company, which is represented in Austria with a large plant in Villach in Carinthia, among other things, had only cut its targets in February and at that time still predicted a recovery in the second half of the year. Hanebeck now said that many end markets were developing weakly due to the economic situation.

"The weak demand for consumer-related applications is dragging on. We are also seeing a noticeable slowdown in growth in the automotive sector," said Hanebeck. In the medium to long term, however, decarbonization and digitalization will remain strong structural drivers for growth, he emphasized.

Cost-cutting program to be launched
Infineon intends to take countermeasures with a cost-cutting program that is expected to generate annual savings in the high three-digit million range. Effects are expected in the course of the coming financial year. Various measures are planned in production, portfolio management, prices and operating costs. Infineon did not initially provide any details.

In the second quarter, turnover fell slightly compared to the previous quarter to 3.6 billion euros. The Green Industrial Power (GIP) and Power & Sensor Systems (PSS) segments in particular experienced a downturn, while the automotive business remained stable. The segment result shrank by 15 percent to 707 million euros, which corresponds to a margin of 19.5 percent.