Mon, Mar 04, 2002 - Page 17 News List

Infineon's CEO says chip prices rising over US$4

BLOOMBERG , MUNICH

Infineon Technologies AG is selling computer memory chips for an average of more than US$4 a chip after "incredibly strong demand" in the last two months, said CEO Ulrich Schumacher.

"We were very surprised that demand not only stayed strong, but also increased significantly in some areas," said Schumacher in an interview after a conference in Wiesbaden, Germany. Still, "we can't tell how sustainable it is."

Chipmakers suffered their worst slump last year as demand from customers such as Dell Computer Corp, the largest personal-computer maker, and Nokia Oyj, slumped. Infineon has announced 5,000 job cuts to help offset the drop in demand and save costs.

The price of a benchmark 128-megabit dynamic access memory chip on the spot market has climbed about 84 percent to US$4.7 since January. Europe's No. 2 semiconductor maker said Jan. 24 it was raising prices, then below US$3.5 for its biggest customers.

Memory chips accounted for 28 percent of Infineon's sales in the fiscal first quarter, close to the company's target of making about one third of revenue from such products. Producing a memory chip cost Infineon an average of US$5.5 at the end of December.

To help close the gap between production costs and chip prices, Infineon and rivals are looking at alliances. Infineon is still talking to competitors after discussions with Hynix Semiconductor ended last month, Schumacher said.

"Everyone is talking to everyone in this market," Schumacher said. These are "standard" discussions and "it's been widely publicized who we've been talking to."

Infineon, which dropped plans for a possible venture with Toshiba Corp after rival Micron Technology Inc agreed to buy the Japanese company's US memory-chip unit, is still talking to Taiwan's Mosel Vitelic Inc, Winbond Electronics Corp and Nanya Technology Corp, the Wall Street Journal reported earlier.

Meanwhile, Germany's securities watchdog is probing possible insider trading in shares of Infineon after a drop in the stock prior to an earnings release in June, Der Spiegel reported.

The regulator is examining account statements and bank documents to determine whether a decline in the stock on June 19, a day before Infineon forecast a 600 million-euro (US$519 million) operating loss for its fiscal third quarter, constituted insider trading, the German magazine reported, without identifying its sources.

Infineon is also being probed for possibly violating disclosure rules for failing to announce the loss early enough on the stock exchange newswire, where price-sensitive information must be released. Infineon shares plunged 14 percent that day.

The chipmaker says it didn't need to release the information via the stock exchange newswire because the loss was in line with analysts' forecasts, the magazine reported.

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