For the year ending September 30, the German chip vendor report net income of 61 million euros ($78.8 million), up from a net loss of 435 million euros ($562 million) the year before.
Income was lower than expected due to the fact that Infineon racked up 345 million euros ($445 million) of charges that were largely related to ongoing antitrust litigation concerning price fixing in the US and European DRAM memory chip market. In September, the company agreed to pay a $160 million fine set by the US department of Justice. Infineon acknowledged conspiring with other companies to fix prices of widely used computer memory products between July 1999 and June 2002.
Infineon has also written down the value of Catamaran Communications Inc by 70 million euros ($90.5 million) after failing to turn the fabless start-up around. Infineon will also exit its venture capital business and drop newer products in order to continue to expand its main memory-chip business.
Meanwhile, sales for the year rose 17% to 7.19 billion euros ($9.28 billion), up from 6.15 billion euros ($7.94 billion) in fiscal 2003. The rise was mainly put down to the industry-wide recovery from the slump that hit the chip sector hard during the downturn.
Unfortunately for Infineon, the charges means that it has missed its chance to profit from what was a bumper year for the industry. Now the German outfit is facing a worldwide market slowdown as oversupply means that all its rivals have issued sales warnings for the coming year.
CEO Wolfgang Ziebart predicted that market growth in 2005 will fall well short of this year. To make matter worse, Infineon sees signs of a slowdown in the current quarter in several of its key markets, despite traditionally strong sales in the run up to Christmas. The news disappointed the markets, which had hoped for robust sales for Infineon’s chips for car electronics systems, mobile phones and smart cards during the last quarter of the year.
