In an effort to combat a tough market environment, German chip maker Infineon recently announced that it will be slashing 1,400 jobs and relocating another 1,400 positions from its current workforce of approximately 58,600 employees worldwide. This decision is part of a larger restructuring program that was initiated back in May with the goal of enhancing the company’s competitiveness.
Following the announcement of the job cuts, Infineon revealed a significant decline in profits for the third quarter of its financial year. The company reported a net profit of 403 million euros, which is a 52 percent drop compared to the same period the previous year. Additionally, revenues for the quarter amounted to 3.7 billion euros, down from 4.1 billion euros in the prior year.
Despite the restructuring efforts, Infineon had to revise its revenue outlook for 2024. The company now anticipates revenues of around 15 billion euros, a decrease from its earlier projection of 16 billion euros. This marks the third time in recent history that Infineon has downgraded its revenue forecast, reflecting the ongoing challenges in the market.
Infineon’s CEO, Jochen Hanebeck, cited the slow recovery in the company’s target markets and prolonged weak economic momentum as factors influencing the revised outlook. Despite the challenging market environment, Hanebeck expressed confidence in Infineon’s ability to withstand the current conditions. He highlighted that while revenues in certain divisions experienced significant declines, particularly in the “green industrial power” and “power and sensor systems” sectors, the automotive division managed to maintain stable sales.
Infineon’s decision to cut jobs and restructure operations comes on the heels of US chip giant Intel’s announcement of a workforce reduction exceeding 15 percent as part of a cost-cutting initiative. Intel aims to reduce expenses by $20 billion this year, aligning with the broader trend of companies in the semiconductor industry scaling back in response to market pressures.
Infineon’s move to cut jobs and reallocate positions underscores the impact of challenging market conditions on the company’s financial performance. Despite the downward revisions in profits and outlook, Infineon remains focused on enhancing competitiveness and navigating the evolving landscape of the semiconductor industry.
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