Infineon Raises Sales Forecast on Energy, Car Chips Demand

Infineon Technologies AG (IFX), Europe’s second-largest chipmaker, raised its full-year sales forecast on surging demand for chips used in energy and consumer electronics products as well as in cars.

Sales in the 12 months through September are now predicted to grow by more than 20 percent, Infineon said in a statement. The company previously forecast a 20 percent increase. Infineon today also reported a 54 percent surge in fiscal third-quarter operating profit that beat analysts’ estimates.

Chipmakers are benefitting from increased technology spending by companies and consumers. Neubiberg, Germany-based Infineon, whose customers include carmaker Bayerische Motoren Werke AG and consumer electronics company Royal Philips Electronics NV, makes chips that replace mechanical parts in cars, manage power in home appliances and windmills, and makes passports and contactless payment cards secure.

“This was better than expected, in particular given the mixed indications we got so far in the tech sector,” said Guenther Hollfelder, an analyst at UniCredit in London. “With their power semiconductors, they are benefitting from a trend for energy efficiency.” He has a “buy” rating on the stock.

Infineon shares rose as much as 2 percent to 7.343 euros in Frankfurt trading today and were up 1.9 percent as of 9:12 a.m. The stock has risen 5.5 percent this year.

Revamp

Infineon’s shares reached an all-time low of 35 cents in Frankfurt trading on March 9, 2009, amid the bankruptcy of memory-chip maker Qimonda, which it carved out of the main business in 2006. Since then it has cut costs, restructured finances and sold its wireline and mobile-chip divisions, the latter to Intel Corp. (INTC)

Earnings before interest, taxes, amortization and one-time gains or costs rose to 212 million euros ($305 million) in the three months through June from 138 million euros a year earlier. That exceeded the 198 million-euros estimate in a Bloomberg survey. Last year’s figure was restated to account for the sale of wireless unit.

“Infineon’s focus on energy efficiency, mobility and security is the right strategy’, Chief Executive Officer Peter Bauer said in the statement. The company today said it predicts its operating margin to be about 20 percent in the full year.

Both Intel Corp., the world’s largest chipmaker, and Advanced Micro Devices Inc. (AMD), a maker of personal computer processors, have forecast third-quarter sales that exceeded analysts’ estimates. STMicroelectronics NV (STM), Europe’s largest chipmaker, on July 26 fell the most in a decade after saying it would be hit by lower sales at Finnish mobile-phone maker Nokia Oyj.

Cyclical Tailwind

In June, Gartner Inc. (IT) cut its forecast for worldwide semiconductor sales growth in 2011 to 5.1 percent from previously 6.2 percent after the Japan earthquake and tsunami.

“Now that the cyclical tailwind is done, it really depends on who your customers are and what the end segments are that you are delivering to,” Hollfelder said.

Infineon’s fiscal third-quarter sales rose by 18 percent to 1.04 billion euros. The gain was mainly driven by demand from its automotive customers and from buyers of computer and energy efficiency chips such as Dell Inc., Microsoft Corp., and ABB Ltd., the world’s largest maker of power-transmission gear.

Net income in the quarter ended June 30 rose 51 percent to 190 million euros.

CEO Bauer said June 1 that Infineon will keep some of its more than 2 billion euros in net cash for opportunistic acquisitions in its three main businesses. The company’s most likely areas for deals are power, power conversion and power management, and the least probable is the automotive market because most companies are too large, he said.

To contact the reporter on this story: Ragnhild Kjetland in Frankfurt at rkjetland@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong in Berlin at kwong11@bloomberg.net