Infineon Technologies AG reported its third straight quarterly loss and said it will be unprofitable this fiscal year, dousing investor optimism for a rebound in the semiconductor industry and sending shares lower.
"I can't imagine that prices for memory chips will recover to the extent that we'll be able to be profitable on a full-year basis," Chief Executive Ulrich Schumacher said on a conference call. Europe's No. 2 chipmaker lost 331 million euros (US$293 million) in its fiscal first quarter, which ended Dec. 31.
Computer-memory chip prices on the spot market have tripled since early November, and Infineon said this month that it was in the process of raising prices for contract customers.
Still, prices haven't exceeded Infineon's full cost of production and the company said it sees no signs of an "overall market recovery."
Schumacher "seems to say there's a pick-up in prices but no real pick-up in volume or demand yet -- that's what's worrying people," said Morag Lenman, a fund manager at Lombard Odier & Cie who holds Infineon shares and doesn't plan to buy more.
Infineon shares fell as much as 1.14 euros, or 4.9 percent, to 22.26 euros. Shares of STMicroelectronics NV, Europe's biggest chipmaker, declined 3.3 percent to 33.42 euros. ST will report earnings after the close of US trading today.
Munich-based Infineon, which announced 5,000 job cuts last year, makes chips for mobile phones and computers. Sales dropped as economies slowed and customers including Dell Computer Corp and Nokia Oyj saw demand for their products cool.
Some investors had become upbeat about an industry rebound after Hynix Semiconductor Inc., the No. 3 maker of computer-memory chips, said in early January that it had raised prices for the third time in less than a month. Samsung Electronics Co has also said it's negotiating price increases with customers.
The spot price for the benchmark 128-megabit DRAM, or dynamic random access memory, chip has risen to US$3.21 from a low of US$1.07 in November. Still, prices are down 41 percent from a year ago, and some analysts question whether the recovery will be sustained.
"The slump may last a while," said Pia Hellbach, a fund manager at Union Investment GmbH, who holds Infineon shares.
Infineon's US$0.48-a-share loss in the past quarter compares with a profit of 280 million euros, or US$0.45 a share, a year earlier. Five analysts surveyed by Bloomberg News, on average, forecast a 388 million-euro loss.
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