Infineon Drops After Cutting Forecast on Weaker U.S. Dollar

  • Fiscal third-quarter sales projection trails estimates
  • Company betting on sales of chips to carmakers to boost growth

Infineon Technology AG fell as much as 4.5 percent in Frankfurt after the German chipmaker lowered its full-year forecasts amid a weakening dollar.

The company cut its sales growth forecast by 1 percentage point to about 12 percent and predicted a segment result margin of 15 percent to 16 percent, assuming an exchange rate of $1.15 to the euro, according to a statement Tuesday. It had previously projected a margin of 16 percent and $1.10 to the euro. Infineon forecast 2 percent sequential sales growth for this quarter, missing estimates, said Sanford C Bernstein & Co. analysts led by Pierre Ferragu.

The lower-than-expected third-quarter forecast and reduced full-year guidance are “primarily related” to the weaker dollar, the analysts said in an e-mailed note. Second-quarter performance across most segments was "decent,” they said, and there were no signs of “broader issues apart from a weaker smartphone market, which is of small and temporary consequence for Infineon.”

Infineon, which makes chips for power-management, sensors, radars and security, is banking on sales of chips to carmakers and the industry to offset slowing growth in smartphone and tablet sales. It has used the acquisition of El Segundo, California-based International Rectifier to expand its existing carmaker customer base to commercial and agricultural vehicle-makers.

The shares declined 4.2 percent to 12.22 euros at 11:50 a.m. local time.

The weaker dollar was the only reason for changing the forecast, Chief Executive Officer Reinhard Ploss said on a call with reporters. Ploss said he "welcomes very much" Germany’s $1.4 billion e-car push announced last week. Infineon expects most of the growth in sustainable cars to come from China, where air pollution is set to drive electric-vehicle sales, he said.

Infineon is optimistic on China because the market has additional sectors with growth potential, including renewable energy and smartphones, Ploss said on an earlier call with analysts.

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