* Plans to raise dividend by 4-6 euro cents per share
* Sees investments at 13 pct of sales, down from 15 pct
* Still expects annual sales growth of 8 pct over cycle
* Shares up 2.7 pct, one of top gainers in sector (Adds level of dividend increase, detail, updates shares)
By Harro Ten Wolde
FRANKFURT, May 6 (Reuters) - German chip maker Infineon said it plans to raise its dividend by up to 6 euro cents per share, as it expects to save money due to better technology.
The announcement comes a week after Infineon toned up its outlook for the year, ending on Sept. 30, buoyed by robust demand from automotive and industrial customers.
The company, whose chips activate airbags, enable cruise control and cut vehicle emissions, is investing to answer growing demand from automotive and industrial customers such as engineering group Siemens, benefiting from an improving global economy and a recovery of European car markets.
Infineon plans to raise its annual dividend by 4-6 cents per share, it said on Tuesday, adding this may happen as soon as this fiscal year. It has paid a dividend of 12 cents per share for the past three fiscal years.
Analysts on average expect a dividend increase of 2 cents, or 13.8 percent, to 14 cents per share for the current fiscal year and a dividend payment of 15 cents for the next year, according to Thomson Reuters data.
Infineon said it expected to invest 13 percent of its annual revenues in coming years, down from a current 15 percent, without being more specific on timeframe. At the same time it still expected to achieve average annual revenue growth of about 8 percent.
The company said the investment in its new 300-millimeter thin-wafer technology for power semiconductors was beginning to pay off. Because more chips fit on the wafer - a thin round slice of silicon material - it is cheaper for Infineon to increase manufacturing capacity when needed.
Chief Executive Reinhard Ploss said he still expected the company to grow faster than its peers.
“The fact that we will need to employ less capital in future to achieve this, clearly demonstrates that we are on the right track with our manufacturing strategy,” he said in a statement.
Infineon shares were up 2.7 percent at 1225 GMT, one of the top gainers on the European technology index which was up 0.3 percent. (Editing by Christoph Steitz and Pravin Char)