MUNICH, Germany—The insolvency of BenQ-Siemens’ German handset business has begun to reverberate throughout the industry, as German chip-maker Infineon Technologies—Europe’s second-largest chip maker—announced it will take a charge of about $101 million against earnings for 2006 due to the firm’s problems.
BenQ’s business accounted for about 15 percent of Infineon’s sales.
Infineon also revised its guidance for next year, projecting that the loss of planned sales in 2007 will reach about $189 million.
These developments are forcing Infineon to restructure, focusing on recently acquired and future customers in mobile communications. (Recently acquired customers include Samsung Electronics Co. Ltd. and LG Electronics Co. Ltd.) The restructuring will lead to the loss of 400 jobs worldwide, half of which will affect workers at three locations in Germany: Nuremberg, Salzgitter and Munich. The restructuring is expected to enable the company to break even by the end of next year, according to Infineon—six months later than previously projected.
The move may exacerbate the still-simmering tensions in Germany over BenQ’s announced layoffs of more than half its 3,000-person German workforce. Siemens AG—which sold its handset business to BenQ in 2005—is coming under fire for the Taiwanese corporation’s decision to stop funding its German operations. Siemens is also the former parent of Infineon.
Infineon’s revenue from its mobile communications business has dropped in recent quarters due to BenQ’s loss of market share. The company said that it has made “good progress” in broadening its customer base and cutting fixed costs. A loss in the current quarter—Infineon’s results are due Nov. 16—would mark seven consecutive quarters in which the company has lost money.
The announcement caused Infineon’s shares on the Frankfurt stock exchange to drop 1.4 percent.
