Infineon to Spend $405 Million on Buybacks as Margins to Narrow

Infineon Technologies AG (IFX), Europe’s second-largest semiconductor maker, said it plans to spend about 300 million euros ($405 million) repurchasing stock a week after predicting a decline in profitability.

The amount will allow Infineon to buy back about 42 million shares, or 4 percent of its share capital, through direct repurchases of issuance of put options on the stock, the Neubiberg, Germany-based company said in a statement today.

The stock rose as much as 2.8 percent, erasing earlier losses today in Frankfurt trading. Last week, Infineon, whose revenue trails STMicroelectronics NV (STM), said its operating profit margin in the current quarter will shrink to as little as 8 percent from 14.1 percent in the previous thee-month period.

The chipmaker is pioneering production from larger-diameter wafers, which Infineon has said will help it manufacture 2.5 times as many chips from each slice. Increasing production in Dresden, of chips cut from 300-millimeter silicon wafers means that reaching Infineon’s target for a 15 percent profit margin will take some time, the company said in July.

To contact the reporter on this story: Kenneth Wong in Berlin at kwong11@bloomberg.net

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

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