Infineon Technologies' third quarter results to be affected by weak market conditions
Since April 24, 2001, when Infineon reported its results for the quarter ended March 31, market conditions in the semiconductor industry have further deteriorated. Leading industry market analysts have repeatedly lowered their growth expectations for the semiconductor industry in 2001 and currently predict up to 20 per cent negative growth for this year.
The continued depressed market conditions have affected most of Infineons business segments in the current quarter:
- With low visibility in the mobile communications market, there are at present no clear signs of a recovery in mobile phone demand. During the current quarter, Infineon has experienced order delays and cancellations from some of its main customers, resulting in lower revenues and rising inventories.
- Following the very difficult quarter ended March 31, a continued weak market for memory products has resulted in further sharp declines in sales prices. Average spot market prices for 256 Mb DRAM equivalents have fallen by around 30 per cent since the end of last quarter (March 31, 2001). Demand has also been weaker than expected, especially in the PC market, leading to higher inventory levels.
- In both the Security & Chipcard ICs and Wireline Communications business groups, Infineon is currently experiencing order cancellations and heavy price pressures due to weak demand.
Infineon has implemented measures to adapt to the challenging market environment. For the current fiscal year, the company has already cut its planned capital expenditures from Euro 2.8 billion to approximately Euro 2.3 billion. For fiscal year 2002, Infineon intends to reduce the level of its previously planned capital expenditures by more than one billion Euro. Besides ongoing cost reduction programs, Infineon has also implemented a hiring freeze and will not replace personnel lost through attrition.
Conference Call Information
Infineon Technologies will host a brief conference call with analysts and investors on June 20, 2001 at 09:00 a.m. Eastern Time (U.S. ET), 03:00 p.m. Central European Time (CET), to respond to questions related to todays release. A broadcast of the telephone conference will be available live and for download on Infineons web site at: www.infineon.com
D I S C L A I M E R
This discussion includes forward-looking statements about our future business. These forward-looking statements include statements relating to future developments of the world semiconductor market, especially the market for memory products, Infineons future growth, the benefits of research and development alliances and activities, our planned levels of future investment in the expansion and modernization of our production capacity, the introduction of new technology at our facilities, the transitioning of our production processes to smaller structures, cost savings related to such transitioning and other initiatives, our successful development of technology based on industry standards, our ability to offer commercially viable products based on our technology, our ability to achieve our growth targets, and the continuation of current developments in our financial results in the 2001 financial year. These forward-looking statements are subject to a number of uncertainties, including trends in demand and prices for semiconductors generally and for our products in particular, the success of our development efforts, both alone and with our partners, the success of our efforts to introduce new production processes at our facilities and the actions of our competitors, the availability of funds for planned expansion efforts, as well as the other factors mentioned herein. As a result, our actual results could differ materially from those contained in the forward-looking statements.
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