The Germany-based company, which claims to account for 4% of the world semiconductor market, believes it is time to talk of a market upswing and has forecast that it will now be profitable for the whole of 2004 if market conditions remain steady.
The caution is understandable given that despite a 25.8% rise in revenue last year to E6.1 billion ($7 billion), it still ended with a loss of E435 million ($490.5 million), down from a loss of E1 billion ($1.17 billion).
Its problems stem from its position as the world’s third largest DRAM supplier in a period where prices have been below the cost of production. While sales rose 34% last year to E2.49 billion ($2.86 billion), earnings before interest and taxation were E31 million ($35.6 million), up from a loss of E630 million ($724.5 million).
It said there was increased sequential demand in the fourth quarter and steadily rising prices, and is pinning hopes on the need for increased memory per PC and a 10% growth in PC unit demand in 2004 as companies replace older equipment. Increasing supply, on the other hand, is expected to be limited as a result of low investment over the past two years.
Overall, Infineon plans capital spending in the new financial year of between E1 and E1.5 billion ($1.15 to $1.7 billion) and financial investments of E200 to E400 million ($230 to $460 million).
It expects moderate growth in the automotive chip market, where it had a 10% sales increase last year, but is expecting solid growth in the wireline communications market in the second half of the year, helped by expansion in the ADSL broadband access market.
This article was based on material originally published by ComputerWire.
