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Ziebart: Infineon must shrink to become a 'problem solver'

Posted: 21 Feb 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Wolfgang Ziebart? Infineon? memory business? Christoph Hammerschmidt?

A sweeping reorientation is the only way to lead Infineon Technologies to lasting profitability, CEO Wolfgang Ziebart told shareholders last week.

The chip maker will therefore narrow its focus to selected markets like mobility and energy management.

Ziebart reported during the meeting here that the spin-off of Infineon's memory business is on track, with the unit expected to become an independent entity by July 1. Ultimately, Ziebart prefers to take the new memory company public.

Ziebart was bullish about the memory market, prompting questions about whether spinning off the memory unit is the best solution for Infineon. Infineon still has industry-leading trench technology that reduces energy consumption and chip area.

Meanwhile, Infineon maintains the industry's highest ratio of 300mm wafers used versus 200mm. This could be translated in a higher productivity, Ziebart acknowledged.

"You can produce cheaper on a partially depreciated 200mm production line than on a new 300mm production line, because depreciation makes up to almost 50 percent of the production cost", Ziebart explained. "But when it comes to 90nm technology, 300mm fabs will prove their advantages," he added.

Still, Infineon's memory business continues to lose money. Ziebart said he knows why: The chip maker has so far failed to position itself in high-margin market segments. Hence, Infineon will refocus on specialty memories for graphic and mobile applications and for servers.

The company still faces stiff competition in the NAND market. Indeed, Infineon's R&D expenses are nearly as high as its sales, Ziebart admitted. Only after the introduction of its next-generation, 70nm technology in about a year will it be competitive. Then, Ziebart predicted, "We will be among the [leaders]."

The rest of the transformed company is being touted as the "New Infineon," which will focus on logic, analog and mixed signal and power businesses. The latter is expected to benefit from energy applications.

Wireline Communications, Infineon's recent problem child, has returned to profitability, Ziebart said. Growing demand for broadband technologies, especially VDSL2, should fuel future growth, he added.

Wireless was a different story. Infineon suffered heavy losses last year while competitors mostly thrived. The reason was the decline of former parent Siemens' handset business. Siemens was Infineon's single biggest customer. Ziebart said Infineon recently booked several wireless design wins, but the results won't show up for at least another year. Volume production also remains months away.

The refocused company will also stop investing in fab capacity. "For products that require the latest logic processes, we won't build a new fab anymore," the CEO said. The only exception is a factory in Kulim, Malaysia, already under construction. For other manufacturing, Infineon will rely on foundries and contract partners, he said.

- Christoph Hammerschmidt
EETimes Germany

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