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According to foreign media reports, German chip maker Infineon released its third-quarter earnings report on Tuesday. Due to the stagnant demand for smartphone chips, Infineon’s third-quarter revenue and operating profit failed to meet its target. After the earnings report, Infineon shares fell 3.9% in early trading.
Infineon holds approximately 5% of the smartphone chip market. Following Apple’s announcement of a decline in iPhone sales, Infineon’s rival Dialog Semi said last week that demand for the smartphone market is currently weak, and it seems that Infineon is not immune.
In the past, Infineon’s demand from smartphone makers in the third quarter has generally increased, as smartphone makers tend to increase production of new handsets during this period and prepare for the release later this year.
According to Infineon’s earnings report, except for special projects, the company’s third-quarter operating profit was 254 million euros (about 284 million US dollars), although it was higher than the 245 million euros in the same period last year, but failed to reach the market analyst average. The forecast of 263 million euros target. According to a Reuters survey, market analysts forecast Infineon's third-quarter operating profit between 252 million euros and 270 million euros, with an average of 263 million euros.
After the earnings report, Infineon shares fell 3.9% in early trading, while the European Stoxx 600 technology index fell only 0.6%.
The energy management division of the smartphone and tablet chip business accounted for one-third of Infineon's overall business. The third-quarter revenue of the division fell by 2% year-on-year, and operating profit decreased by 19% year-on-year.
Infineon said: "Contrary to normal seasonal trends, revenue from mobile communications components can only remain unchanged."
Technology research firm Gartner predicts that the growth rate of global smartphone sales this year will be half that of last year, only about 7%. Demand for the Chinese market continues to decline due to increased economic uncertainty; in the more mature European and American smartphone market, demand has also been shrinking as consumers have extended their mobile phone upgrade cycles.
Infineon said that demand from payment cards has also declined due to weaker market conditions.
At the same time, the automotive products division, which accounts for 40% of the company's total revenue, performed well. The third-quarter revenue of the division increased by 9% year-on-year, and operating profit increased by 32% year-on-year. Infineon's chips can be used to activate car airbags and achieve cruise control.
Infineon’s third-quarter revenue was 1.63 billion euros ($1.82 billion), also slightly below the market analyst’s forecast of 1.65 billion euros.
Infineon maintains its full-year earnings forecast unchanged. It expects full-year revenue to increase 10% to 14% from the previous fiscal year, and operating profit margin will be between 15% and 16%.
Some analysts had previously predicted that Infineon would raise its full-year revenue and profit forecasts, as the euro exchange rate will weaken after Brexit, and demand for radar chips from the automotive industry has shown an increasing trend.
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