Apr 12, 2001 In the midst of plunging next-quarter forecasts and beyond, Germany's Infineon chalked up a profitable 2000 and is optimistic about 2001.
"With record earnings in the past fiscal year Infineon clearly exceeded the expectations it set at its initial public offering in March 2000," explained Dr. Ulrich Schumacher, President and CEO of Infineon Technologies, at the company's first public annual general meeting.
In 2000, the company made big gains in productivity and margin improvements in all segments, and believes it will stand firm in the present volatile market environment of 2001.
"The memory and wireless communications segments will be weak", Dr. Schumacher said, "but we see robust margin and revenue growth in automotive electronics, smart cards, and various applications in wireline communications." One of Infineon's strong points, he added, is its well balanced product portfolio.
Infineon has a strong portfolio of semiconductor technologies plus a technological lead in the rapidly growing wireline and wireless communications segments, security and chip card ICs, and the internet infrastructure markets. In the 2000 fiscal year, Infineon generated 40 percent of its sales in these segments.
In microelectronics, the company has at its disposal the key chip technologies used to extend the Internet, including ultra high-speed data transmission and broadband communication. Infineon also has an excellent market position in wireless communications. For example, one in two GSM cell phones now contains an Infineon chip. The company is also equipped to support future mobile communications standards, such as GPRS and UMTS.
Internet and online security, in the areas of e-commerce and m-commerce, are important growth markets, Schumacher said. Infineon has a strong presence in these markets with its security and chip card ICs business group.
"The automotive and industrial electronics business group performed exceptionally well in 2000", Schumacher said. "Infineon today ranks second worldwide and first in Europe in this area with the trend toward an increasing quantity of electronics in vehicles continuing." Last year, the semiconductor content in cars increased 20 percent.
The power management and supply business unit is also successful, profiting from a variety of applications in the automotive sector and in wireless communications.
"We head the industry in the production of 300mm silicon wafers, which offer a cost advantage of approximately 30 percent," Schumacher told the shareholders.
The Internet and the spread of digital networking across the industry are driving development not just in communications technology but also in memory and storage products. Infineon is concentrating increasingly on the less "volatile, high-growth markets for server and network memory and storage. This move is reducing the company's dependence on the traditional PC market, while simultaneously extending market share in higher-margin memory segments.
Outlook for fiscal 2001
Growth has slowed markedly in the wireless communications market since the start of the new year. "Predicting which way the market will go is difficult at the moment. Most of our key customers, however, continue to expect positive growth in the second half of the year," commented Dr. Schumacher.
The market environment for memory products has been difficult in recent months. Initial signs, however, point to a recovery in demand although the sustainability of this early trend is not yet foreseeable. Infineon continues to expect an increase in the second half of the year.
Infineon is focusing on the rapidly growing communications, automotive electronics, and memory sectors. It expects to see strong growth in security applications and chip-card solutions as well as in some important applications of the wireline communication business. Developments in automotive and industrial electronics business are also extremely positive.
Dr. Schumacher stated: "We are confident that compared tolast fiscal year we will be able to continue to increase significantly margins in these areas."
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