Jul 23, 2001 Europe's second biggest semiconductor maker said it made an operating loss of 598 million euros ($523.2 million) in the three months to the end of June, in line with the profit warning it gave last month.
"Visibility for the market development in the second half of calendar year 2001 remains low and there are no clear signs of market recovery in the coming months," Chief Executive Ulrich Schumacher said in a statement.
Infineon shares dropped on the news, falling almost three percent to 26.55 euros by 0705 GMT, while the blue-chip DAX index was 0.76 percent weaker.
The group said third-quarter sales fell 30 percent to 1.28 billion euros.
"Infineon's loss was caused by strong price erosion, especially for memory products and costs of carrying unused capacity," the company said in a statement.
The Munich-based group said weaker demand and lower product prices had hit results at its memory, communications chips businesses and security and chip card businesses.
Only the Automotive and Industrial business held up, supported by growing demand for auto electronics.
NO SIGNS OF RECOVERY
Infineon said it saw no signs of a pick up in prices for memory products for personal computers and servers, where prices have been caught in a downward spiral for months and are currently well below production costs.
It also said it saw no signs of recovery in the mobile handset market, matching two of Europe's biggest handset makers, Nokia and Ericsson, which last week refused to give any forecast for the rest of the year.
Infineon's downbeat forecast echoes recent statements from the sector, which has been struggling with a pile up of components left unsold in warehouses as demand for products ranging from mobile phones to telephone networks, computer equipment and consumer electronics has slowed dramatically.
The world's biggest semiconductor maker Intel indicated it expected some firming of demand in the second half and Europe's largest semiconductor group, STMicroelectronics , said recently it expected the market to pick up in the fourth quarter. But the relatively optimistic outlook has not been shared by others in the industry.
Philips Electronics, Europe's third-largest chip maker said it did not expect a recovery before next year and Dutch semiconductor equipment maker ASML Holding said it did not expect any recovery before the second half of 2002. (For a table of Infineon's results, please click on [nRFRA1QnEN]
Copyright 2001, Reuters News Service
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