Infineon is laying off 1,400 jobs
Infineon takes action following recent profit drop. Job cuts of hundreds are imminent, with the Bavarian chipmaker also planning to offshore the same number of jobs to low-wage countries. However, the company has reaffirmed its commitment to the Regensburg site.
Chipmaker Infineon plans to cut 1400 jobs and relocate a further 1400 to cheaper countries. The company from Neubiberg near Munich had previously reported figures for the third quarter of its fiscal year, which showed that the company is only slowly emerging from the current crisis. While revenue and earnings increased slightly compared to the second quarter, they are still far from last year's level. Notably, profits plummeted by more than half to 403 million euros.
That the current program to improve competitiveness would also cost jobs was already known. However, it was unclear how many jobs would be affected. Infineon CEO Jochen Hanebeck did not specify where the cuts or relocations would occur, stating that they would first inform employees. He ruled out job cuts in Germany due to operational reasons. The measures are "a difficult step" that the management "did not take lightly."
Guarantee for Regensburg site
It has been known for several months that a three-digit number of jobs will be cut in Regensburg, which is part of the total now announced. The cuts in the Bavarian city primarily affect a production area. Nevertheless, Regensburg will remain "a central site," Hanebeck emphasized, stating that it will be further focused on innovation, ensuring its long-term security. Regarding the Dresden site, Hanebeck said that jobs would continue to be created there. The relocation of 1400 jobs affects all "high-wage countries" from North America to Asia, with the majority going to countries where Infineon is already active.
Infineon is currently suffering, like many other chip manufacturers, from weak demand for its products. After the chip shortage of recent years, the situation has reversed: While businesses and customers had previously placed orders well in advance and built up inventories, these are now being reduced and chips are being ordered on a shorter-term basis due to improved availability.
Markets recovering slowly
Infineon CEO Jochen Hanebeck described the market environment as challenging. "The recovery in our target markets is proceeding slowly." This development is also affecting Infineon. The company has had to lower its forecasts several times and in the third quarter, it fell short of expectations with revenue of 3.7 billion euros. For the fourth quarter, it expects revenue of 4 billion euros, and for the full year, 15 billion euros. 2024 will be a transitional year, Hanebeck emphasized, stating that the company now sees a bottoming out in the cycle.
However, the news from Infineon was well received on the stock market. After a weak start in the morning, the stock turned positive in the morning and was the strongest performer in the overall declining DAX index. However, the stock had already lost significant value in the previous two months.
Manufacturers like Infineon are grappling with job cuts due to the challenging market environment. Despite planning to offshore 1400 jobs to low-wage countries, Infineon reaffirms its commitment to its Regensburg site, positioning it as a central site for innovation.
