German chip manufacturer Infineon (IFXGn.DE) announced a cost savings program on Tuesday as it once again revised down its full-year revenue outlook, attributing it to ongoing industry-wide weak demand.
The company adjusted its revenue guidance for the year to 15.1 billion euros ($16.3 billion), with a variation of plus or minus 400 million euros, down from its previous forecast of 16 billion euros, with a variation of plus or minus 500 million euros.
Infineon also expects its segment result margin, which is management’s preferred measure of operating profitability, to be lower than previously anticipated, around 20%, as stated by the company.
Despite a previous outlook revision in February that foresaw a recovery in the second half, CEO Jochen Hanebeck indicated on Tuesday that many end markets were experiencing weak development due to economic conditions. He noted that customers and distributors continue to decrease semiconductor inventory levels, with the automotive sector particularly affected by a noticeable growth slowdown.
To address these challenges, Infineon is implementing measures focused on production, portfolio management, prices, and operating costs. The company expects these actions to yield positive results on the adjusted segment result beginning in fiscal 2025.
“We are aiming to achieve structural improvements in our segment result in the high triple-digit million euro range per year,” said Hanebeck in a statement.
Shares in early Frankfurt trade declined by 2.4% after the release of the results.
In the second quarter, revenue slightly decreased compared to the previous quarter, amounting to 3.63 billion euros, while the segment result contracted by 15% to 707 million euros.
Infineon is among chipmakers grappling with weakening demand from carmakers and personal electronics. Last month, peer STMicroelectronics (STMPA.PA) also lowered its full-year sales guidance following lower-than-expected first-quarter results, attributed to weakening demand from carmakers.
