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Infineon shares boosted by new MasterCard order

Infineon Technologies AG, Europe's second-biggest maker of semiconductors, won an order from credit card firm MasterCard Inc to deliver chips which allow contact-less payments.

MasterCard is currently introducing credit cards with these chips in 13 countries, including the US, Australia and Taiwan, Infineon said in a statement yesterday. Infineon also delivers such chips, which allow payments that don't require the card to be swiped magnetically, to MasterCard rival Visa International Inc. No financial details of the deal were given.

The order is a boost for Infineon's chief executive officer Wolfgang Ziebart, who planned to focus on tailor-made semiconductors for cellular phones, credit cards and cars after he split off the memory-chip division last year.

The market for contact less payments is expected to grow 63 percent on average every year in the next five years, Infineon said in the statement, citing a study of US market researcher Frost & Sullivan.

Infineon competitors in the market for credit card chips include South Korea's Samsung Electronics Co and Japan's Renesas Technology Corp. Infineon said it had a 2005 market share of 31 percent in the market for contact-less payments chips, which are also used in electronic passports and public transport tickets.

Infineon, based in Neubiberg near Munich, currently has orders for about 17 million credit card chips from MasterCard and Visa, the company said in the statement.

Shares of the company rose as much as 0.24 euros, or 2 percent, to 12.40 euros in Frankfurt yesterday and were trading at 12.35 euros as of 10:32am. The shares jumped 11 percent, the biggest gain in four years, on Wednesday after Infineon won an order to supply mobile phone chips to Nokia Oyj.

Nokia, the world's largest maker of handsets, will use Infineon's products in some of its lower-priced "entry-level" phones, the companies said in a statement on Wednesday. No financial details of the deal were given at the time.

The chipmaker is seeking new orders for its cellular-phone division after BenQ Mobile, Infineon's largest client, ran out of cash last year and went into liquidation in last month. The collapse forced Infineon to cut 400 jobs and delay some profit goals.

Nokia has increased sales in China and India, the world's fastest growing mobile-phone markets, spurring orders for chips used in lower-priced cellular phones.

The Nokia deal is a "major inflection point for Infineon's wireless communications business" and "increases the chances" to win other "significant" mobile phone chip contracts in the next 12 months, UBS analysts Jonathan Dutton and Ashish Jain wrote in a note to clients on Wednesday. They raised their rating on Infineon shares to "buy" from "neutral" and increased their target price to 14.30 euros from 12.50 euros.
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