By Mauro Orru


Infineon Technologies lowered its sales forecasts for fiscal 2024 as the group reckons with months of weak demand for chips in personal electronics such as computers and smartphones.

The German chip maker said Tuesday that it is aiming for around 16 billion euros ($17.19 billion) in sales for the year ending in September, down about 2% from fiscal 2023. Its segment result margin--a key profitability metric--is expected in the low to mid-20s percentage range compared with 27% in fiscal 2023. The group had previously guided for roughly EUR17 billion in revenue and a segment result margin of about 24%.

Infineon and the wider chip industry have been grappling for months with low demand for their semiconductors in computers, smartphones and other consumer devices. In contrast, the automotive industry has provided a lifeline to the sector as car makers seek smaller and more energy-efficient chips in their push for electric vehicles.

"In consumer, communication, computing and IoT[Internet of Things] applications, we are not anticipating a noticeable recovery in demand until the second half of the calendar year," said Chief Executive Jochen Hanebeck. "Our expectations for the automotive sector remain virtually unchanged from November, despite a slowdown in demand in electromobility outside China."

Hanebeck's remarks echo recent commentary from other chip makers. STMicroelectronics said last month that automotive demand was stable, though it said there was a deterioration in industrial demand and no significant improvement for personal electronics. Texas Instruments also warned of growing weakness across industrials.

While forecasts for personal-electronics demand played a key role in bringing down sales guidance, Infineon said that about half of the expected decline in revenue is due to an adjustment in exchange rates. The group is now assuming an exchange rate of $1.10 to the euro compared with $1.05 when it originally set out fiscal 2024 guidance in November.

Infineon also lowered its investments in plants, equipment and other assets this fiscal year to roughly EUR2.9 billion from EUR3.3 billion previously.

The company posted revenue of EUR3.70 billion for the three months to the end of December compared with EUR3.95 billion in the previous year's fiscal first quarter. Its automotive division contributed EUR2.09 billion to sales, up 11% on year. However, revenue at its power and sensor systems unit contracted 27% to EUR765 million.

Net profit slipped to EUR587 million from EUR728 million, while its segment result contracted to EUR831 million from EUR1.11 billion, generating a 22.4% margin.

Analysts had forecast revenue of EUR3.82 billion and a net profit of EUR549 million, with a segment result of EUR826 million, according to FactSet. Infineon had expected quarterly revenue of around EUR3.8 billion and a segment result margin of around 22%.

For the current quarter through March, Infineon expects revenue of roughly EUR3.6 billion and a segment result margin of about 18%. Revenue at its automotive, green industrial power and connected secure systems businesses should stay at about the same level as in the previous quarter, while sales in the power and sensor systems unit is expected to decline noticeably.


Write to Mauro Orru at mauro.orru@wsj.com


(END) Dow Jones Newswires

02-06-24 0243ET