Automotive, security products drive Infineon's expectations

January 30, 2014 // By Christoph Hammerschmidt
Not a bad start into the year for Infineon: Despite revenues and profit were in line with the lowered expectations, under the bottom line the chipmaker achieved a better margin than predicted. The good figures were driven mainly by strong sales in the automotive business where Infineon achieved nearly 50% of its overall sales.

In comparison with the previous quarter, the 1Q figures don't look overly good, with sales down 7 % and gross income down 39%. Nevertheless, the margin was better than predicted and reached 11.8 % which was still better than the pessimistic forecast of 8 to 10%. The reason for the improvement was that the company was able to raise its manufacturing productivity faster than anticipated.

The automotive business rose by 20 percent in comparison to the same quarter last year, second only to the Industrial Power Control business which added 30 percent - however, this business segment is much smaller than automotive and accounts for only 18 percent of the company's sales.

For the quarter ahead, Infineon expects overall sales to rise in the mid single digit percentage region, driven mainly by higher demand in the automotive market. And as a surprise, the stagnating business with chip cards and security products will finally switch to a higher gear - Infineon expects it to significantly contribute to the growth.

In the medium term, Infineon expects to benefit disproportionately from the fledgling electromobility market. In a recent interview, Automotive Division President Jochen Hanebeck said he expects sales into this marketplace to increase tenfold by 2020.

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