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Infineon Technologies feeling tightness around its supply chains

by on03 August 2021

Might need to let out a notch

German chipmaker Infineon Technologies is battling extreme tightness in its markets as the latest wave of the COVID-19 pandemic disrupts production in Asia and inventories hit all-time lows.

Results for the fiscal third quarter at the leading supplier of chips to the automotive industry reflected those strains, with quarterly revenue growth of a percent lagging analyst expectations even as profit margins widened.

Chief Executive Reinhard Ploss said that demand for chips was unbroken, but the market was facing an extremely tight supply situation."

 Third-quarter revenue of 2.72 billion euro ($3.2 billion) was below the consensus of 2.77 billion euro in a poll of analysts by Vara Research. Profit margin widened to 18.2 percent from 17.4 percent in the prior quarter, beating a consensus view of 18 percent.

Infineon maintained its forecast for revenue in its fiscal year to 30 September of 11 billion euro, while nudging up its guidance for segment result margin - a measure of operational profitability - to above 18 percent.

Ploss said inventories were "at a historic low; our chips are being shipped from our fabs straight into end applications".

Under those circumstances, any government-imposed lockdowns - such as one in Malaysia where Infineon has a production site - were especially grave, Ploss added.

"We are doing our utmost to improve matters along the entire value chain and are working as flexibly as possible in the best interests of our customers", said Ploss. "At the same time, we are continuously building up additional capacity."

Infineon will be able to raise output of specialist power-management chips with the commissioning of its new plant in Villach, Austria, but it still relies heavily on Asian contract manufacturers that are running flat out.

In addition to the pandemic hit to production at its site in Melaka, Malaysia, Infineon said it was still dealing with the aftermath of a winter storm that crippled its chip fabrication plant in Austin, Texas.

Infineon said it expected revenue of 2.9 billion euro in the fourth quarter, with its automotive and power systems expected to show flat sales, and a segment result margin of 19 percent.

Last modified on 03 August 2021
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