LONDON Infineon Technologies revealed wider-than-expected losses for its third quarter, blaming weak memory prices, further deterioration in its security and chip-card unit and the cost of phasing out production at its Munich-Perlach facility.
However, the company said it expects a slight turnaround in the fourth quarter due to seasonal strengthening of sales to the automotive sector, but it saw ‘no improvement’ for the security and chip card segments, and a potential marginal improvement for communications ICs.
Europe’s second-biggest chipmaker booked pre-tax losses of Euros 225 million ($271 million) for the three months to June 30, almost double the previous quarter’s Euros 117million ($141 million) loss.
The net loss was Euros 240 million ($290 million).
Revenues were down year-on-year in all three of Infineon’s product divisions of memories; automotive, industrial and multimarket; and communications devices. Total revenues in the third quarter were Euros 1.61 billion ($1.95 billion), almost the same as in the previous quarter but for the nine months, revenues are nearly 4 percent down on last year.
Despite a 45 percent increase in memory shipments during the quarter, sales fell 19 percent year-on-year to Euros 659 million ($795 million). Infineon said memory price erosion was greater than expected, a decline of nearly 30 percent expressed as price-per-bit compared with the previous quarter. It also said an increase in production costs at its Richmond, Virginia facility in the U.S. had affected earnings.
The biggest decline was recorded in the communication product division, with revenues of Euros 314 million ($379 million) showing a 25 per cent reduction on the previous year.