BenQ Weighs on Infineon Earnings

Additional charges related to the spin-off of its memory chip unit and bankruptcy of a large mobile phone customer have widened the fourth-quarter loss at German chip maker Infineon Technologies.

Infineon lost 36 million euros (US$46 million) for the quarter that ended Sept. 30, compared with a loss of 23 million euros in the prior quarter.

The fourth-quarter loss included 164 million euros in charges relating to the carve-out and IPO of Qimonda, the memory chip unit, and to impairments resulting from the bankruptcy of German handset maker BenQ Mobile.

Last month, Infineon said it planned to lay off 400 workers globally and take charges in fiscal 2006 totaling 80 million euros due to losing BenQ Mobile as a communications chip customer.

The BenQ Mobile bankruptcy will also impact the German market for semiconductors, with 2006 sales expected to decline 3 percent to 11.3 billion euros, the German Electrical and Electronic Manufacturers’ Association (ZVEI) announced earlier this week at the electronica trade fair in Munich.

Meanwhile, German politicians, union leaders and executives from former owner Siemens are working on a plan to salvage parts of BenQ Mobile. The plan calls for narrowing the focus of the company on developing mobile phones as an original design manufacturer for customers with their own brands, including mobile operators, marketing companies and other handset manufacturers.

A slimmed-down BenQ Mobile would rely on its competencies in the areas of mechanics, materials and miniaturization to develop and design new phones that meet the specific requirements of their customers.

Both Siemens and Taiwan’s BenQ, which bought the money-losing mobile manufacturing business from the German electronics giant, have been under fire following the Taiwanese company announcing plans in late September to discontinue investment in its German subsidiary and seek bankruptcy protection.

-John Blau, IDG News Service (Dusseldorf Bureau)

Related Link:

• BenQ Mobile Bankruptcy Prompts Infineon Job Cuts

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