Infineon to spin off memory ops amid mounting losses

November 18, 2005 – After months of rumors and speculation, Infineon Technologies AG has finally decided to split off its memory products division by July 2006, with a possible IPO by next summer, the company said. Infineon’s remaining units will focus on logic products, comprised of automotive, industrial electronics and multimarket, and communications groups, although both logic and memory entities will maintain established partnerships for development and manufacturing to optimize capital expenditures and R&D investments.

“The processes and business models for memory and logic are developing in diverging directions,” stated chairman Wolfgang Ziebart, explaining that memory focuses on time-to-market, manufacturing efficiency, and heavy capital investments, vs. the more application-oriented logic business. The company stated that it will continue to utilize manufacturing sites in Dresden and Essonnes, France, while cooperating with UMC for 90nm and the IBM/Chartered/Samsung group for 65nm and 45nm technology.

The decision to slough off its memory unit comes alongside the latest fiscal 4Q04 numbers for the German chipmaker, showing losses more than doubling to 100 million euros (US$118 million) on 13% less sales of 1.73 billion ($2.03 billion). Operating profits in Infineon’s memory unit sunk 77% to 34 million euros ($40 million), with sales down 5% year-on-year to 768 million euros; for the year Infineon’s memory group posted a 122 million euro operating profit (-28% from 2004) on 3% lower sales of 2.83 billion euros. For the year, Infineon’s overall losses mounted to 312 million euros ($367 million), vs. a 61 million euro profit in FY04, with 6% decline in sales to 6.76 billion euros.


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