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Infineon raises chip alarm
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November 7, 2000: 7:35 a.m. ET
German firm expects weaker computer chip demand even as Q4 profit surges
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LONDON (CNNfn) - German chipmaker Infineon Technologies AG warned it expects weaker demand and lower prices for chips used by the personal computer industry in the current fiscal quarter, as it unveiled a 16-fold jump in its most recent quarterly profit.
"Due to the current uncertainties in the worldwide PC markets, Infineon expects weaker demand and consequently lower prices in its memory business in the first quarter of fiscal year 2001," the company said in a statement.
 The company's shares fell 5.6 percent to  51.40 in midday trade in Frankfurt. French rival STMicroelectronics (PSTM) shed 2.4 percent to 57.80 in Paris.
The country's biggest semiconductor maker said its fiscal fourth-quarter profit soared as demand for chips for mobile phones and Internet infrastructure surged.
Net income for the three months to Sep. 30 rose to 581 million ($500 million), or 0.93 per share, from 36 million, or 0.06, a year ago. Revenue rocketed 82 percent to 2.4 billion.
Infineon (FIFX), which is 71 percent-owned by engineering company Siemens AG (FSIE), has mirrored moves by many rivals by shifting its focus increasingly toward the money spinning world of Internet and mobile communications. The industry's potential for profitable growth has lured companies such as U.S. computing giant International Business Machines Corp. (IBM: Research, Estimates), which plans to spend $5 billion to make chips used in network servers, Internet access devices and other networking and communications equipment.
The semiconductor industry historically has been characterized by boom-and-bust cycles, with periods of undersupply and high prices followed by spells of overcapacity and slumping profits. 
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Infineon
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