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Sat, Mar 27, 2004 - Page 12 News List

Infineon head quits, union suspects he was forced to leave

AP , FRANKFURT, GERMANY

The head of German computer-chip maker Infineon Technologies AG, Ulrich Schumacher, quit unexpectedly Thursday, with the union representing company workers saying he had lost a boardroom battle over leadership style and strategy.

Company officials and Schumacher offered no public explanation for the resignation, which a brief company statement said was accepted by a meeting of the board of directors.

Schumacher's contract runs through 2007 and he was quoted as saying in a newspaper interview published a week ago that he "could imagine working here another 20 years without any problem."

The IG Metall union, which represents Infineon workers, issued a statement saying Schumacher had clashed with other top executives over strategy and what the union called Schumacher's "authoritarian" leadership style.

The union statement said board members had been suddenly summoned for "a general reckoning over the strategy of the company in the past year." It said it greeted Schumacher's departure "with little regret," citing his advocacy of outsourcing and an "image-damaging" suggestion that the company might move its headquarters out of Germany.

Two seats on the company's 16-member board of directors are set aside for union representatives under German corporate law, and five more for non-executive employee representatives.

The board temporarily appointed its chairman, Max Dietrich Kley, as interim chief executive for up to a year, the company statement said.

Infineon's shares dropped on the news, closing down 1.7 percent in Frankfurt.

Schumacher, 45, had led the company back to profitability last year after nine straight quarters of losses when the semiconductor industry bottomed out after the end of the technology boom.

With companies now beginning to spend more on new computers, the company's prospects were looking up, Schumacher said in January when the company released its earnings, which showed a small profit of illion euros (US$42 million) for the last three months of last year.

"All business indicators show that the semiconductor industry is finally in an upswing phase. The worst crisis ever experienced in the semiconductor market seems to be over," Schumacher said at the time.

Schumacher faced criticism from disappointed shareholders and shareholder advocates at this year's annual meeting, with some saying the company's executive pay was excessive given the long stretch of losses.

He has also been a critic of Germany's business climate, at one point threatening to move the company's headquarters out of the country to avoid what he said were excessive German taxes.

Schumacher had been chief executive since Infineon was formed from parent company Siemens AG in 1999. Siemens has since reduced its stake in Infineon to around 19 percent.

Munich-based Infineon is the world's No. 3 maker of DRAMchips, behind Samsung Electronics and Micron Technologies.

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