Infineon cites ongoing legal cases for drop in income

Infineon Technologies posted a large third-quarter loss due to charges resulting from ongoing US and European DRam (dynamic Ram)...

Infineon Technologies posted a large third-quarter loss due to charges resulting from ongoing US and European DRam (dynamic Ram) antitrust investigations as well as related potential civil claims.

Infineon raised its accrued charge in relation to ongoing legal cases to €212m (£141m), an increase of €184m.

Net income in Infineon's third quarter before accrual rose to €107m. But as a result of the accrual costs, the company posted a net loss in the quarter of €56m, compared with a net loss of €116m in the same quarter last year.

Infineon reported third-quarter revenue of €1.9bn, up 30% year on year and 14% sequentially. Revenue coming from outside Europe made up 60% of total revenue for the company, with sales in North America constituting 22% of total revenue, which was comparable to the previous quarter. Sales in the Asian market represented 37% of total revenue, up sequentially from 35%.

Third-quarter revenue in its memory products division was €811m, an increase of 43% over the same quarter last year and an sequential increase of 22%. The gains came primarily from an overall market rise in DRam prices, the company said.

Along with the ongoing antitrust cases in the US and European Union, Infineon is dealing with a total of 25 class action lawsuits, which have been filed against the chip maker and other DRam suppliers in various federal and state courts in the US, said Max Dietrich Kley, the company's chief executive officer.

The lawsuits have come primarily from OEMs (original equipment manufacturers) and retailers, Kley said, but indicated that Infineon may be beginning to see a light at the end of the litigation tunnel.

"Over the last few months, we've tried to come to an agreement with the Department of Justice [DOJ], which I can't discuss now, but we have an idea of the approximate amount of damages that might result," Kley said. "The DOJ has different principles when they determine a fine and we have received some indication as to those principles that may apply, but we can't give those figures right now."

For Infineon's fourth quarter, Kley said that the company expects continued overall growth in revenue and earnings. Specifically, in its memory products division, Infineon forecast increases due to seasonal demand and modest supply additions in the industry, resulting in what it called a favourable supply-demand-balance for the quarter.

By the end of the third quarter, Infineon said it had approximately 34,400 employees worldwide, including about 6,900 engaged in research and development.

Laura Rohde writes for IDG News Service

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