Infineon unveils deep cost-cutting drive amid waning chip demand

Investing.com -- Shares in Infineon (OTC: IFNNY) Technologies (ETR:IFXGn) surged in European trading on Tuesday after the German chipmaker said it would roll out deep cost-cutting measures in response to tepid demand from car manufacturers and for personal computing electronics.

Chief Executive Jochen Hanebeck said that these expense reductions should start have a positive impact on Infineon's adjusted result in its 2025 fiscal year.

The announcement comes after the firm trimmed its annual revenue guidance to 15.1 billion euros, plus or minus 400 million euros. It had previously predicted full-year revenue of 16 billion euros, plus or minus 500 million euros.

Segment result margin -- a key gauge of operating profits -- is also seen at 20%, a lower mark than three months ago.

"Weak demand for consumer applications persists. There has also been a noticeable deceleration in growth in the automotive sector," Hanebeck said in a statement. "We are therefore taking a cautious approach to the outlook for the rest of the fiscal year."

However, analysts at Morgan Stanley said that the guidance slash was "not unexpected," noting that the ongoing pain in the inventory channel for industrial semiconductors in particular is "well marked this season."

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