January 29, 2007 – Infineon Technologies AG posted a 1Q07 profit of 120 million euros (about US $155 million) vs. a 183 million euro (~$224 million) loss a year ago, on 27% higher revenues of 2.13 billion euros ($2.75 billion). Automotive segment sales and earnings were stronger than anticipated, and the company’s power semiconductor unit also enjoyed a “solid performance,” noted CEO Wolfgang Ziebart. Still, most of the positive earnings news came from Qimonda, the memorychip unit spun off last fall (Infineon still has a significant majority stake, ~86%), which posted earnings of 177 million euros ($228.7 million).
Revenue charges related to restructuring BenQ’s German subsidiary will be taken in 2Q, and will be significantly lower than the 30 million euros initially expected.
In the follow-up conference call with analysts and investors, Ziebart anticipated “the usual negative seasonality” in 2Q, with revenues and EBIT essentially flat with 1Q. He noted that inventories are expected to ease a bit as the company’s communications business picks up, and the mix shifts in factories. He noted that logic utilization in 1Q “was not completely 100%, and the tendency is going upwards, adding that the company sees short-term opportunities “especially in the power semiconductor area by ramping up our manufacturing in Kulim [Malaysia] faster.”
Regarding the company’s fab-lite strategy and subsequent reduction in spending, Ziebart acknowledged that development expenditures should continue to fall over the next couple of years, with mid-to-long-term depreciation levels of roughly 10%-12% of revenues.