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Infineon reportedly planning DRAM unit spin-off

Posted: 18 May 2004 ?? ?Print Version ?Bookmark and Share

Keywords:infineon technologies? dram? memory chip?

Infineon Technologies AG is considering whether to sell or spin off its DRAM memory chip business, according to European press reports on Thursday, May 13, 2004. According to the Financial Times and FT Deutscheland, volatile pricing in the DRAM business is a key reason for two years of heavy losses at the German chipmaker before its recent recovery. Although the company had promised to reduce its dependency on the DRAM sector, it remains 40 percent of sales.

The German newspaper report said that although no decision has been made, the business was, according to a source, "as good as gone." An announcement was expected within a few weeks, citing a source "familiar with the situation."

It remains unclear whether the unit would be separated through a stock market listing, a sale or a joint venture.

The spin-off project originated with ousted CEO Ulrich Schumacher. The proposed move was cited as a reason for Schumacher's abrupt departure in March, the paper said. Also unclear is who on the board of directors would champion the project after Schumacher's resignation.

Infineon refused to confirm or deny the report. "We do not comment on this kind of thing," a spokesperson said.

However, Infineon insiders agreed that management might consider a separation of the DRAM business. Company sources pointed out that Infineon has previously sold underperforming units. For instance, Infineon recently sold its optical fiber business to Finisar in return for a major stake in the company. That could serve as a possible model for a DRAM spin-off.

In addition, exiting the volatile DRAM business would be consistent with comments made about Schumacher's replacement, a href="">Wolfgang Ziebart, who is due to take the helm at Infineon by this summer. Sources close to Infineon said Ziebart, a former tire manufacturing executive, could signal Infineon's future direction.

Exiting the DRAM business means Infineon would also lose 40 percent of its sales and lose influence as a player in the global semiconductor market.

- Christoph Hammerschmidt and Peter Clarke

EETimes Germany

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