Infineon, a leading German chip manufacturer, has downgraded its revenue forecast

 

Infineon, a leading German chip manufacturer, has downgraded its revenue forecast for 2024 due to weak demand from its major target markets. The company now expects a revenue of €15.1 billion, plus or minus €400 million, which is lower than its previous forecast of €16 billion, plus or minus €500 million.

In the second quarter of 2024, Infineon's revenue dropped by 2% compared to the previous quarter, generating €3.36 billion. This represents a 12% decline year-on-year. The company's revenue also decreased by 11% in the first quarter of 2024 compared to the last quarter of 2023.

According to Jochen Hanebeck, Infineon's CEO, the company's more conservative earnings forecast is due to a "prevailing difficult market environment." Many end markets, including the automotive sector, consumer electronics, and the decarbonization industry, have remained weak due to economic conditions. Additionally, customers and distributors have continued to reduce semiconductor inventory levels.

To address the challenging market conditions, Infineon is implementing measures to increase its competitiveness, including productivity improvements, operating cost optimization, and portfolio management.

Infineon is not alone in its struggles. The chip market is experiencing a slowdown, with many semiconductor companies reporting profit drops. Last month, chip giant ASML also reported a decrease in sales and earnings for Q1 2024, citing the challenging economic environment and the industry's downturn.

The decline in demand for chips is attributed to various factors, including the ongoing economic uncertainty, the COVID-19 pandemic, and the global semiconductor shortage. As a result, many chip manufacturers are facing significant challenges in maintaining their revenue and profit levels.

In this context, Infineon's decision to downgrade its revenue forecast is not surprising. The company's efforts to improve its competitiveness and adapt to the changing market conditions will be crucial in navigating the current challenges and positioning itself for future growth.