Infineon Jumps as Forecast Beats Estimates on Order Recovery

Infineon Technologies AG, Europe’s second-biggest chipmaker, gained the most in almost four years after projecting revenue for this quarter that would top analysts’ estimates as demand for its semiconductors recovers.

The stock rose as much as 10 percent, the biggest intraday jump since July 2009, after Neubiberg, Germany-based Infineon said sales in the fiscal third quarter through June will be about 1 billion euros ($1.32 billion). Analysts predict 948 million euros, the average of estimates compiled by Bloomberg.

The company, whose biggest customers include car-component maker Robert Bosch GmbH and Apple Inc. supplier Hon Hai Precision Industry Co., lifted its revenue forecast for the fiscal year to the upper end of an earlier range. Infineon joins other chipmakers in projecting a recovery in demand after weaker sales prompted the company last year to scale back production capacity to curb costs.

“We feel good about how the company has weathered the recent downturn,” Chief Executive Officer Reinhard Ploss said on a conference call. “As volumes rise we expect our profitability to rise in tandem.”

The segment margin, a measure of operating profitability, will rise to 10 percent in the current quarter from 7.4 percent in the preceding three months, Infineon said. The shares advanced 8.9 percent to 6.53 euros at 12:35 p.m. in Frankfurt, valuing Infineon at 7.1 billion euros.

‘Trough’ Behind

Infineon lifted its forecast for the year ending Sept. 30 to the “upper end” of its previous projections for both sales and profit. It had predicted a “mid-to-high single digit” percentage drop for revenue and a segment-result margin “in the mid-to-high” single digits.

Fiscal second-quarter sales rose 8 percent to 918 million euros from the previous three months. That also beat analysts’ estimates. The segment result, or operating profit adjusted for some items, increased 55 percent to 68 million euros.

While orders from automotive suppliers in particular recovered in the quarter, a large share of contracts are short term, meaning it’s difficult for Infineon to predict its performance toward the end of its fiscal year, Ploss said.

“It does look like the trough is behind them and the whole sector for now,” said Tim Wunderlich, an analyst at Hauck & Aufhaeuser Privatbankiers KGaA. “It’s difficult to see whether this can be sustained for several quarters as the euro crisis is still alive and the macroeconomic environment still fragile.”

More Chips

To increase efficiency in the longer term, Infineon is pioneering production from larger, 300-millimeter diameter wafers, which the company says will help it manufacture 2.5 times as many chips from each slice.

Texas Instruments Inc. and Intel Corp. forecast in April sales for the quarter ended June 30 that may top some analysts’ estimates. Dallas-based Texas Instruments cited strengthening demand from manufacturers of automotive and industrial parts, while Santa Clara, California-based Intel is betting on server chips to offset a slump in sales of personal computers.

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