Infineon sees signs of recovery

Infineon Technologies plant worker displays semiconductors, Singapore

FRANKFURT, Germany (CNN) -- Infineon Technologies, Europe's second-largest chipmaker, has said the market over the next six months remains "somewhat" uncertain, but sees signs that demand is recovering.

The German company, which has slashed 5,000 jobs over the past year as the industry experienced its worst slump, also managed to reduce its losses in the second quarter.

Its loss in the second-quarter to March 31 narrowed to 108 million euros ($96 million) from a loss of 331 million euros in the first three months of its financial year, according to figures released on Tuesday. In the second-quarter of 2001, it made a profit of 23 million euros.

The company said a sustained recovery in DRAM (dynamic random access memory) chips that are used in computers -- where it derived more than 40 percent of its revenue -- was dependent on corporate customers upgrading PCs and infrastructure.

Corporate customers have delayed or slashed spending on new machines amid a global economic slowdown.

Infineon sales rose to 1.39 billion euros, up 34 percent on the previous quarter, but a decrease on the second-quarter of 2001.

"Infineon's revenue performance was driven by the overall improvement in demand in all business groups and a strong increase in prices of memory products," said Chief Executive Ulrich Schumacher.

Late on Monday, Europe's biggest chipmaker STMicroelectronics said first-quarter net income dropped 90 percent to $32.9 million and sales declined 29 percent to $1.36 billion. It also said it expected sales in the second quarter to rise 10 percent higher than the previous three months.

Infineon echoed the cautious sentiment of a pickup in the industry.

"The market outlook for the next six months still remains somewhat uncertain and will depend on the extent and sustainability of the recovery of the world economy, particularly in Europe and the United States," it said.

"There are increasing signals for an overall positive development of demand."

Infineon's stock rose 4.3 percent to 24.15 euros at the start of trading in Frankfurt on Tuesday. STMicroelectronics also rose 4.3 percent to 36.12 euros in Paris.