Poor memory chip sales widen Infineon Q2 losses

John Blau

German chip maker Infineon Technologies AG failed to stem losses in its fiscal third quarter largely due to the poor performance of its memory chip spin-off Qimonda AG.

Net loss in the third quarter swelled to ,197 million (US$144 million as of June 30, the last day in the period being reported), compared to ,23 million in the same period a year earlier.

In addition to restructuring charges, a main contributor to the increased loss was Qimonda, which remains a subsidiary and earlier this week posted a loss of ,218 million in its third quarter after a profit of ,54 million the year before. Third-quarter revenue of the memory-chip maker plunged 24 percent to ,740 million.

Excluding Qimonda, Infineon posted earnings before interest and taxes of ,13 million, compared to a loss of ,28 million in the year-earlier period.

Without Qimonda, the Munich manufacturer reported third-quarter revenue of ,1 billion in the third quarter, up from ,978 million the year before.

Last year, Infineon spun off its volatile DRAM (dynamic RAM) operations into the new Qimonda unit to focus on more lucrative areas such as chips used in mobile phones, automotive electronics and security systems.

DRAM chips are used in numerous products, but in particular as the main memory in personal computers, a highly competitive business that has been subject to intense price pressure in recent years.

In the fourth quarter, Infineon expects revenue to increase, fueled by demand from mobile phone makers.