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Infineon Sees First-Quarter Margin Drop on Power Segment

Infineon Technologies AG, Europe’s second-largest semiconductor maker, predicted a profitability decline for its first quarter because of a sales drop at its power-management chip unit.

Infineon fell the most in 3 1/2 months after saying earnings before interest and taxes, which the manufacturer calls segment result, will amount to 8 percent to 10 percent of sales in the three months through December. The fourth-quarter margin widened to 14.1 percent from 11.8 percent a year earlier.

A quarter-on-quarter sales decline will be “significantly more pronounced” for the power-management and chip-card and security businesses, Neubiberg, Germany-based Infineon said today in a statement.

The company 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, Germany, of chips cut from 300-millimeter silicon wafers means that reaching Infineon’s target for a 15 percent profit margin will take some time, Chief Executive Officer Reinhard Ploss said on July 30.

Infineon fell as much as 4.7 percent to 6.95 euros, the steepest intraday drop since July 30, and was trading down 4.5 percent at 9:32 a.m. in Frankfurt. That pared the stock’s gain this year to 14 percent, valuing the company at 7.52 billion euros ($10.1 billion).

The fourth-quarter segment result jumped 28 percent from a year earlier to 148 million euros, Infineon said. Analysts on average projected Ebit of 134.5 million euros. Earnings were helped by a reduction in risk allowances for inventory, the manufacturer said.

Revenue rose 7.2 percent from a year earlier to 1.05 billion euros, matching the company’s forecast. Infineon predicted today that first-quarter sales will total 960 million euros to 1 billion euros.

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