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Tue, Nov 11, 2003 - Page 12 News List

Infineon has first profit in 10 quarters; sales gain

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Infineon Technologies AG, Eur-ope's second-biggest semiconductor maker, reported its first profit in 10 quarters, helped by cost reductions and rising prices for memory chips used in personal computers.

Net income was 49 million euros (US$56.5 million), or US$0.07 a share, in the fourth quarter ended in September, compared with a loss of 506 million euros, or US$0.72 a year ago, Infineon said in a statement to the Frankfurt exchange. Sales rose 37 percent to 1.76 billion euros.

Analysts expected profit of 42.4 million euros and sales of 1.59 billion euros.

"I feel that we can talk about a market upswing but we should not become too enthusiastic," chief executive officer Ulrich Schumacher said in the statement.

The company said it expects to post a profit in its fiscal 2004.

Demand for semiconductors used in PCs is recovering after a two-year slump that led Infineon to cut more than 5,000 jobs and reduce investments.

Munich-based Infineon's main computer-memory unit benefited from higher demand for dynamic random access memory chips, or DRAMs.

The research company Gart-ner Inc last week predicted that worldwide personal computer shipments will rise 12 percent in the fourth quarter of the year, raising a forecast it made in September.

The company's stock has almost doubled in value this year, while Germany's benchmark DAX Index has gained 29 percent.

Schumacher, who has said he is considering moving Infineon's headquarters outside of Germany to a country with lower tax rates, has been expanding operations in China and moving administrative functions to other parts of Europe in an effort to reduce costs while boosting production.

The memory-chip unit accounted for almost 40 percent of total third-quarter sales.

Infineon is reducing costs at the unit by using 300mm wafer technology and developing partnerships in Asia.

The company in July said it would cut its average cost to make each memory chip to US$4.50 in the fourth quarter.

Global chip sales in September had the biggest monthly gain since 1990.

The gains were ascribed to personal computer sales, which are 30 percent of the end market for semiconductors and had an increase of 33 percent in DRAM memory chips, according to the Semiconductor Industry Association.

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