Infineon has become another chipmaker to shed a chunk of the workforce to cut costs after reporting shrinking sales.

Germany's largest semiconductor biz says it plans to expunge 1,400 jobs worldwide and relocate a further 1,400 positions to countries with lower labor costs, all part of a previously announced cost savings program.

The move follows the shock news from chip giant Intel, which last week announced plans to ditch at least 15 percent of its workforce, more than 16,000 staff, a decision it also chalked up to weaker-than-expected economic performance.

Infineon's job cutting announcement came in a statement from CEO Jochen Hanebeck, who blamed weak economic momentum and claimed the layoffs were necessary in order to strengthen the company's competitiveness.

"In a market environment that remains challenging, Infineon continues to hold up well," he said.

However, revenue for the chipmaker's Q3 for FY 2024 ended June 30 came in at €3.702 billion ($4.065 billion), 9 percent down year-on-year, and falling short of market expectations.

The company tried to put a positive spin on the results by pointing out that its revenue was up 2 percent from the €3.632 million in the previous quarter, and attributed this to gains in its Automotive (ATV) and Power & Sensor Systems (PSS) segments.

Net profit for the period was €394 million ($432 million, down from €831 million (911 million) a year earlier.

Infineon's previously announced cost savings initiative was unveiled alongside the company's Q2 earnings announcement in May, named as the "Step Up" program. It applies to manufacturing productivity, portfolio management, pricing quality and optimization of operating costs.

A spokesperson for Infineon told us that Step Up aims to boost Infineon's segment results in the high triple-digit million euro range per year, and it expects to see the first results in the course of the 2025 fiscal year, with the full financial effect becoming visible in the first half of the 2027 fiscal year.

"Step Up is about strengthening our operational structures in the long term regardless of the current weak cyclical market environment. Therefore, we will continue to implement Step Up even when the markets recover," the spokesperson said.

For Q4 of its FY 2024, Infineon is expecting revenue of about €4.0 billion ($4.3 billion), while its outlook for the full FY 2024 is for revenue of about €15 billion ($16.4 billion).

Also back in May, Infineon said it was on schedule with the construction of its Smart Power fabrication plant in Dresden and was starting the final construction phase, having received the last outstanding building permit from the Prime Minister of Saxony.

The facility, which was announced last year with a total investment of €5 billion ($5.5 billion), is scheduled to start manufacturing in 2026. Ironically, it is expected to create an additional 1,000 jobs in the region. ®

https://www.theregister.com//2024/08/05/infineon_announces_layoffs_as_q3/