Infineon Technologies AG, Europe's second-largest semiconductor maker, signed an agreement with Winbond Electronics Corp (華邦電子) to expand the two companies' collaboration in producing computer-memory chips.
Infineon, based in Munich, will transfer to Winbond the technology needed to produce smaller, 90-nanometer chips onto larger, 300mm wafers, the Taiwanese company said in an e-mailed statement. The companies will share the profit coming from the production, Winbond said.
The agreement "further solidifies the foundation for future high-level technology transfer cooperations between the two companies," Winbond said.
Infineon and Winbond, which run three wafer-producing factories, have already cooperated on production of larger, 11-nanometer chips. Infineon will also assist Winbond in building a new 300mm wafer factory and in return will gain part of the production capacity at the plant, Winbond said.
Shares of Infineon, however, fell to their lowest in more than a year on concern that higher oil prices may hurt demand for consumer electronics and falling chip prices will erode earnings.
The shares dropped as much as 0.29 euros, or 3.4 percent, to 8.28 euros and traded at 8.31 euros as of 11:40am in Frankfurt, bringing declines since the beginning of the year to 25 percent.
J.P. Morgan analysts said yesterday the possibility of negative early announcements from chipmakers for the third quarter seems to be "increasingly likely." The MSCI World Semiconductors and Semiconductor Equipment Index has lost a quarter of its value this year on concern the peak of an industry cycle may be near.
"Some investors are selling Infineon because they anticipate market conditions are getting worse, although the growth rate of the business is still substantial," said Michael Busse, an analyst at Helaba Trust GmbH, who rates the stock "overweight."
"Others are under pressure to sell in order to restrict losses," he said.
Crude oil futures rose to record levels in New York and London yesterday, heading for a sixth weekly gain. The spot price for the most widely used dynamic random access memory chip used in personal computers has fallen for three straight weeks to US$4.25, according to Dramexchange.com.
The price has dropped 35 percent from a high of US$6.53 on April 12.
"The high oil price may increase production costs and prices of many consumer electronic products that use Infineon's chips, leading to lower demand," said Theo Kitz, an analyst at Merck Finck, who rates the shares "hold."
"Shares of Infineon are also under pressure because of falling DRAM spot prices and talk about an oversupply of chips in the market," Kitz said.
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