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November 15, 2012

Infineon Technologies to implement cost cutting measures to improve sales

Company will reduce its investment budget from €500M to approximately €400m during this year

By CBR Staff Writer

German chipmaker Infineon Technologies is planning to implement drastic cost cutting measures, cut in investment and lay off workforce after the company reported slump in sales during fourth quarter of 2012.

The company has also reduced its investment budget from €500M to approximately €400m during this year while it had invested €890m last year.

Infineon Technologies said, given the macroeconomic uncertainties and the prospect of further decreases in revenue, the company has decided to streamline production costs by temporarily switching off underutilised equipment, reducing the temporary workforce and the selective use of short-time work.

In addition, lesser important projects like Research and Develop-ment and Sales and Marketing will either be postponed or cancelled and costs related to external service providers will be reduced.

The cost cutting measures expected to save more than €100m.

During fourth quarter, Infineon Technologies has reported 5% drop in sales to €982m while sales for the entire year dropped 2% to €3.9bn.

Operating profit fell by 42% to €432m, fourth quarter profit however increased 10% to €138m.

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Infineon Technologies CEO Dr. Reinhard Ploss said macroeconomic headwinds are getting stronger and the company does not see that changing in the near term.

"We are therefore forecasting a drop in revenue for the 2013 fiscal year," Ploss said

"Nonetheless, Infineon continues to pursue the right strategy by focusing on energy efficiency, mobility and security."

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