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Business

German chip maker Infineon surprises with doubling profits

Within just one quarter, the profit earned by chip maker Infineon more than doubled on the back of surging sales and higher margins. The result is said to narrow the German firm’s prospected loss for the full year.

Business in Infineon's fiscal third quarter, which ended in June, was brisk, resulting in 11 percent higher sales and a profit which had surged 133 percent, according to an earnings report issued by the German chip maker on Tuesday.

While revenue grew to 1.02 billion euros ($1.35 billion) for the period from April to June, after-tax profit surged to 77 million euros from about 33 million in the previous quarter, Infineon said.

The surprise jump in profit was the result of a higher profit margins, Infineon said, which had grown from an average of 7.4 percent in the second quarter to 11.4 percent now. Highly volatile semiconductor prices had risen sharply recently on the back of higher demand from the automobile and energy industries.

Moreover, Infineon's business strategy was bearing fruit, said Chief Executive Reinhard Ploss, adding that the firm was in a position to quickly and decisively take advantage of an upswing in the markets.

Infineon expressed the hope that the crisis in the semiconductor business was over and that it might be able to limit a drop in sales and earnings for the whole business year, ending in September.

Compared with the 2011/2012 business year, Infineon said sales for this year were expected to decline by about 1.5 percent - a figure that was considerably better than the 5 to 10 percent drop originally forecast.

The loss would be limited thanks to further growth expected for the final quarter with prospected revenues of 1.05 billion euros.

uhe/dr (Reuters, AFP, dpa)

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