Infineon Technologies Announces Global Job Cuts and Relocation Plans Amid Weak Demand

Weak demand - Infineon plans to cut jobs and relocate

NEUBIBERG (dpa-AFX) - The chip company Infineon plans to cut 1,400 jobs worldwide in view of weak demand. In addition, another 1,400 jobs are to be relocated from high-wage countries, as Group CEO Jochen Hanebeck announced on Monday in a conference call on the quarterly figures. There were initial signs of improvement in the third quarter. However, the recovery is proceeding slowly. On the stock market, the recently battered share price rose in a weak market. The DAX-listed share initially came under pressure due to the general market weakness, but then turned positive. Most recently, it was the only winner in the leading German index with a price increase of 2.3 percent to 30.21 euros. Since the interim high in mid-June, however, the share price has still fallen by around 22%. In addition to recent poor quarterly figures from US chip giant Intel, the downturn was triggered by recession worries and fears that the hype surrounding artificial intelligence (AI) could have gone too far. Infineon's latest development has now apparently provided some relief. Looking at the business figures, Jefferies analyst Janardan Menon described them as "strong". In addition, the chip manufacturer is sticking to its annual targets in the difficult environment. The segment result margin is above his estimate. Infineon wants to save costs by cutting jobs and relocating jobs from high-wage countries from North America to Asia. Infineon had already announced a fundamental cost-cutting program at the beginning of May, when the company had to lower its forecast for the second time due to the difficult market environment. According to Infineon, the program focuses on the areas of "manufacturing productivity, portfolio management, price quality and operating costs". The company's innovative strength is not to be impaired in the process. The management is also sticking to the expansion of production in Dresden and Kulim. Jobs will continue to be created in Dresden, said Hanebeck. It remains to be seen how the announced cuts will be distributed regionally. For Germany, Hanebeck ruled out redundancies on Monday. The job cuts at the Regenburg site are already included in the plan. Here, Infineon had announced the reduction of a mid three-digit number of jobs. At the conference, Hanebeck emphasized that Regensburg would remain a central location for Infineon. The relocations are to take place internally - and to more favorable locations where Infineon is already active. Infineon is struggling with sluggish demand for chips. Hanebeck said that customers' warehouses were still full and that inventories were still outstripping final demand in many places. Although the Group CEO now sees "a bottom forming in the current cycle". "A complete recovery is not in sight." For the current financial year, CFO Sven Schneider, for example, put the idle capacity costs, i.e. for underutilization of production capacity, at around 800 million euros, 60 percent of which fell in the second half of the financial year. Infineon is not alone with these problems. The chip market remains tense despite the hype surrounding AI. Competitor STMicroelectronics recently lowered its forecast for the second time. And after a weak quarter, Intel announced the reduction of 15,000 jobs - around 15 percent of its workforce. Infineon improved slightly in the third quarter (to the end of June) and halted its downward trend of the previous quarters. Compared to the previous quarter, turnover rose by two percent to 3.7 billion euros. This was slightly less than the company had previously forecast. Hanebeck justified this with the postponement of deliveries to the fourth quarter. The segment result, which measures the company's operating performance, increased by four percent to 734 million euros, while the corresponding margin improved by 0.3 percentage points to 19.8 percent. This exceeded analysts' expectations. The bottom line was 403 million euros - after 394 million in the previous quarter. Looking at the same quarter of the previous year, Infineon continued to record significant declines in sales and profits. For the fourth quarter, the company expects revenue to increase to around four billion euros, with a segment result margin of around 20 percent. For the 2023/24 financial year (as at the end of September), revenue is expected to amount to around €15 billion, which is within the range previously announced. The expectation of a segment result margin of around 20 percent was confirmed./nas/mis/jha/

This German chip company announces job cuts, to layoff 1,400 employees worldwide - Times of India

Infineon, a Germany-based chipmaker, has announced its plans to cut 1,400 jobs worldwide. According to a report by news agency Reuters, the cuts include the cancellation of several hundred positions at the company's plant in the southern German city of Regensburg. Reportedly, another 1,400 jobs are to be relocated away from high-wage countries. The announcement comes as company CEO Jochen Hanebeck reported the company's revenue after missing expectations in its third quarter due to sluggish demand. Infineon adjusted its full-year revenue outlook for the third time in the space of a few months.Infineon now expects full-year revenue of around 15 billion euros. Hanebeck ruled out compulsory redundancies for Germany and a clarity on how the cuts will be distributed regionally is yet to be provided. Notably in May, reports suggested that Infineon will layoff employees at the Regenburg site. The latest announcement includes those job cuts in the plan. Infineon had announced the reduction of a mid three-digit number of jobs. Job cuts at Intel Recently, US-based chipmaker Intel announced mass layoffs and said that it will reduce the employee headcount by over 15,000 employees, representing more than 15% of its workforce. As per Intel CEO Pat Gelsinger, the layoffs are a part of a $10 billion cost-saving initiative for 2025. Gelsinger cited lower-than-expected revenue growth and challenges in capitalising on AI trends as reasons for the measures. The company plans to complete the majority of layoffs by the end of 2024. Over 100,000 job cuts in tech industry till July 2024 The tech industry saw upwards of 100,000 job cuts. In July 2024, over 8,000 professionals lost their jobs across 34 technology companies. The total layoff count for 2024 has now reached 124,517 employees from 384 companies worldwide. The TOI Tech Desk is a dedicated team of journalists committed to delivering the latest and most relevant news from the world of technology to readers of The Times of India. TOI Tech Desk's news coverage spans a wide spectrum across gadget launches, gadget reviews, trends, in-depth analysis, exclusive reports and breaking stories that impact technology and the digital universe. Be it how-tos or the latest happenings in AI, cybersecurity, personal gadgets, platforms like WhatsApp, Instagram, Facebook and more; TOI Tech Desk brings the news with accuracy and authenticity.