Infineon sees signs of steady chip card demand

FRANKFURT (Reuters) - German chipmaker Infineon AG (IFXGn.DE) on Wednesday reported better-than-expected results for the three months to December and said it saw early signs that its chip card markets are stabilizing.

Infineon also said it automotive clients, which account for 41 percent of revenue, continued to show confidence. Chip card markets provide 10 pct of it sales.

The company said in November its fiscal full-year revenue would likely fall, hit by a slowing economy and growing caution among customers in industrial and chip card markets.

Infineon shares were up 3 percent at 3:40 a.m. ET.

The company said sales in its second quarter, ending in March, would be flat to slightly lower from the previous three months as its power management and industrial business were experiencing some seasonal and late-cyclical weaknesses.

The industrial division is its biggest business segment, accounting for about 45 percent of annual group revenue.

Infineon, which was spun off from engineering group Siemens (SIEGn.DE) more than a decade ago, said its financial first-quarter business segment result, a measure of operating profit, fell 28 percent from the previous quarter to 141 million euros ($184.6 million). That was above a consensus forecast of 130 million in a Reuters poll.

The company expects the margin on its total segment result to be down broadly by 1 percentage point in the second quarter.

Analysts on average see Infineon's 2011/2012 revenue declining 5.2 percent.

Semiconductor industry hit a slump last year as demand for consumer gadgets slowed in Europe and elsewhere due to economic uncertainties at a time when vendors had invested heavily in the new production gear.

Infineon in 2010 sold its wireless chip unit to Intel (INTC.O). It now focuses on three areas: automotive, industrial & multimarket, and chip card & security.

$1 = 0.7639 euros)

(Reporting by Harro ten Wolde; Editing by Erica Billingham)