Infineon CEO Ziebart steps down; Bauer takes over

MUNICH, Germany Mon May 26, 2008 2:07pm EDT

Wolfgang Ziebart gestures during a news conference in Munich, March 31, 2006. REUTERS/Alexandra Winkler

Wolfgang Ziebart gestures during a news conference in Munich, March 31, 2006.

Credit: Reuters/Alexandra Winkler

MUNICH, Germany (Reuters) - Wolfgang Ziebart has resigned as chief executive of German chipmaker Infineon (IFXGn.DE) over management clashes about strategy and will be replaced by board member Peter Bauer, the company said.

Ziebart had suffered increasingly public criticism from his chairman Max Dietrich Kley, most notably at the company's annual meeting early this year, when Kley said more urgent action was needed to reverse Infineon's losses.

Infineon said on Monday that Ziebart, who has led the company for four years, would step down on June 1. The supervisory board had thrown its support unanimously behind chairman Max Dietrich Kley, it added in a statement.

The company said it was initiating a program to improve profit margins, details of which would be worked out in the coming weeks. A spokesman said it was too early to say whether job losses would follow.

A source close to the company's supervisory board had told Reuters earlier this month that 58 year-old Ziebart, whose contract was due to expire in September 2009, was negotiating terms of an early departure.

An Infineon spokesman said Ziebart and the board had come to a mutually acceptable arrangement but declined further comment.

Ziebart, a former automotive executive, had failed to produce a full-year profit at Infineon during his tenure.

His departure follows that of ex-Freescale CEO Michel Mayer a few months ago as increasingly desperate chipmakers seek change at the top amid a prolonged industry downturn.

Peter Bauer, 47, currently runs the company's automotive, industrial and multi-market chips unit, as well as being responsible for administrative functions. He has been on Infineon's board since 1999.

He began his career in 1986 in the semiconductor division of German industrial conglomerate Siemens (SIEGn.DE) and moved with the business when Siemens spun it off as Infineon.

Infineon's automotive, industrial and multi-market division is the only consistently profitable part of the company. The company spokesman said Bauer would continue to head this division alongside being CEO.

Bauer said in the statement: "Infineon has outstanding technology and an outstanding market position in many areas."

"If we focus even more strongly with our resources and put in place the necessary measures quickly and without compromise, then I see good chances for a successful future."

Infineon said it planned to improve margins through responsible management of its portfolio, bigger cuts to its manufacturing costs and raising efficiency.

METHODICAL AND POPULAR

With his methodical approach and affable manner, Ziebart could not have been more different from Ulrich Schumacher, his flamboyant predecessor who was ousted in a 2004 boardroom coup in which Kley also played a key part.

Ziebart, a former executive at BMW (BMWG.DE) and Continental (CONG.DE) before he joined Infineon, set in motion a variety of measures designed to return Infineon gradually to profitability.

Despite tough decisions to cut costs by moving production to Asia and outsourcing orders, he remained a popular and well regarded manager.

By far Ziebart's most radical move was splitting off Infineon's memory-chip operations as a separate company, Qimonda QI.N, and listing it independently in New York in 2006.

However, he failed to achieve the desired distance from the volatile and cut-throat market in commodity DRAM memory chips, as buyers for its majority stake failed to come forward, leaving Infineon still holding 77 percent of Qimonda, whose losses exceeded its revenues in some quarters.

Last month, Infineon wrote down the value of its Qimonda stake by 1 billion euros ($1.6 billion) and said a further writedown was likely after Qimonda reported another quarter of deep losses.

Even excluding Qimonda's results, Infineon recently warned that the weak dollar would keep sales at best flat this quarter and ruled out reaching its target to make operating profit of 10 percent of sales next fiscal year if the dollar stays this weak.

Ziebart's departure may clear the way for a merger with Dutch chipmaker NXP NXP.UL, according to recent German media reports.

One such report said Kley had already talked about such a merger to private equity group KKR KKR.UL, one of NXP's owners, without Ziebart's involvement.

(Editing by David Cowell/Elaine Hardcastle)

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