(Adds analyst comments on iPhone, updates shares)
By Georgina Prodhan, European Technology Correspondent
FRANKFURT May 29 Chipmaker Infineon (IFXGn.DE)
warned on wireless profits and sales, saying a project to supply
Nokia NOK1V.HE had been delayed, casting further uncertainty
over the handset sector and sending Infineon shares lower.
A spokesman said Infineon had also received lower orders
than expected for an unnamed project to supply HSDPA chips for
high-speed Internet phones, leading analysts to speculate
Apple's (AAPL.O) new iPhone would launch at lower volumes.
Infineon, whose chief executive said this week he would step
down early over differences on strategy, said on Thursday it now
expected a bigger operating loss and flat sales at its
communications unit this quarter compared with last quarter.
The world's fourth-biggest wireless chipmaker had previously
forecast a narrower operating loss and higher sales at the unit,
which brings in about a third of sales at Infineon's core
businesses, excluding memory-chip subsidiary Qimonda QI.N.
The warning follows a cautious outlook from chipmaker Texas
Instruments TXN.N last month, which cited caution among a
broad customer base and weak demand for high-end cellphones.
It also comes a day after research firm Gartner said
cellphone sales in western Europe fell sharply in January-March.
Infineon's delayed supply deal with Nokia is for single
chips for ultra-low-cost phones aimed at developing markets.
Nokia said its development of these phones was on target and
it would not be affected by Infineon's announcement because it
had multiple suppliers for the project.
Shares in Infineon tumbled 10.1 percent to 5.62 euros by
1058 GMT, by far the leading decliner in a flat German DAX index
"This was actually already foreseeable after Texas
Instruments' results," said analyst Heino Ruland of
FrankfurtFinanz. "Now they don't want to throw any dirt at the
new CEO and so they're getting the news out beforehand."
Pohjola Bank analyst Hannu Rauhala said: "This does not
increase at all confidence in cellphone market development."
Analysts speculated that the unnamed HSDPA customer that had
placed lower orders was Apple, which is expected to announce its
new 3G iPhone early next month, since that would have been
Infineon's most significant ramp-up of HSDPA chips this quarter.
"In our view the profit warning has been caused by ramp
changes of next generation iPhone," UBS analyst Nicolas Gaudouis
wrote, saying he expected an impact of 20 million euros on
Infineon's sales from supplying 1.5 million fewer chipsets.
JPMorgan analyst Sandeep Deshpande wrote: "It could be
possible that the lower volumes in the certain platform ramp
cited could be Apple reducing the initial launch volume."
Infineon, which has not confirmed it will supply chips for
the new iPhone, said last month it had won Samsung (005930.KS)
as a customer for HSDPA (high-speed downlink packet access)
chips. Samsung declined to comment on Thursday.
Infineon Chief Executive Wolfgang Ziebart said on Monday he
would step down on June 1, after increasingly public criticism
from Chairman Max Dietrich Kley of his failure to improve
profitability more quickly.
He will be replaced by Peter Bauer, who will also continue
to run Infineon's Automotive, Industrial and Multi-market
division, the most consistently profitable part of the company.
Infineon's communications chips unit has repeatedly
disappointed, briefly turning profitable in the last quarter of
2007, as promised, but then returning to losses.
Infineon had said as recently as last month that the Nokia
single-chip project for ultra low-cost phones was on track.
Excluding gains and charges, Infineon said it now expected
earnings before interest and tax (EBIT) and sales at its
communications unit to pick up again in the fourth quarter to
end-September, compared with the third.
The wireless chip landscape is in flux, with
STMicroelectronics (STM.PA) buying NXP's wireless chip business
for $1.6 billion to form a $3 billion joint venture last month.
German media reports have said Infineon Chairman Kley has
been talking to private equity firm KKR [KKR.UL], one of NXP's
main owners, about merging the remaining businesses of Infineon
(Additional reporting by Tarmo Virki in Helsinki and Kirsti
Knolle in Frankfurt; Editing by Paul Bolding)