Infineon launches savings programme as weak demand persists

BERLIN (Reuters) -German chip manufacturer Infineon announced a cost savings programme on Tuesday as it again lowered its full-year revenue outlook, blaming ongoing industry-wide weak demand.

The company lowered its revenue guidance to 15.1 billion euros ($16.3 billion), plus or minus 400 million euros, for the year, down from its previous guidance of 16 billion euros, plus or minus 500 million euros.

The segment result margin, management's preferred measure of operating profitability, is also likely to be lower than predicted three months ago, at around 20%, Infineon said.

Infineon had cut its outlook in February but at the time predicted a recovery in the second half.

However, CEO Jochen Hanebeck on Tuesday said that many end markets were developing weakly due to the economic situation, and customers and distributors continue to reduce semiconductor inventory levels, with the automotive sector in particular seeing a noticeable slowdown in growth.

To counter this, Infineon is launching measures focused on production, portfolio management, prices and operating costs that the company said should start to have a positive result on the adjusted, or segment, result beginning in fiscal 2025.

"We are aiming to achieve structural improvements in our segment result in the high triple-digit million euro range per year," said Hanebeck in a statement.

Shares in early Frankfurt trade were down 2.4% after the results.

In the second quarter, revenue fell slightly compared with the previous quarter to 3.63 billion euros, with the segment result shrinking by 15% to 707 million euros.

Infineon joins the ranks of chipmakers struggling with weakening demand from carmakers and for personal electronics.

Peer STMicroelectronics last month also lowered its full-year sales guidance after it posted lower-than-expected first-quarter results on weakening demand from carmakers.

($1 = 0.9288 euros)

(Reporting by Christina Amann and Miranda Murray, Editing by Rachel More, Kirsti Knolle and Lincoln Feast.)