Business Performance Highly Dependent on How Corona Virus Unfolds: Infineon

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  • Infineon has posted results for the third quarter of the 2020 fiscal year
  • The company’s revenue for the three-month period increased from €1,986 million to €2,174 million quarter-on-quarter

Infineon Technologies AG has reported results for the third quarter of the 2020 fiscal year (period ended 30 June 2020). The company had completed the acquisition of Cypress Semiconductor Corporation on 16 April 2020.

“Infineon has so far coped well with the challenging situation caused by the coronavirus pandemic. As a company, we reacted quickly to the new situation and established a framework that has enabled us to stabilize our business. Our diversified business model – which is further strengthened with the integration of Cypress – has proven to be robust, especially in terms of profitability,” said Dr.Reinhard Ploss, CEO of Infineon.

He continued, “The pandemic continues to have a significant impact on our target markets, resulting in weaker demand in many product areas. Thankfully, we are seeing concrete signs of recovery within the automotive sector, which has been particularly hard hit. Infineon is also benefitting from increased digitization through the growing volume of data traffic, the Internet of Things and mobile communication. Our outlook for the final quarter of the fiscal year is cautiously optimistic. That said, our business performance is highly dependent on how the corona virus pandemic continues to unfold worldwide, on the impact of the economic stimulus packages that have been implemented, and on a variety of geopolitical factors.”

Nine per cent growth in group revenue

The company’s revenue for the three-month period increased from €1,986 million to €2,174 million quarter-on-quarter. The acquisition of Cypress Semiconductor Corporation was successfully completed on 16 April 2020. Cypress has therefore been fully consolidated with effect from that date.

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Cypress’ various lines of business have been allocated to the Automotive (ATV), Power & Sensor Systems (PSS) and Connected Secure Systems (CSS)1 segments. The ATV and CSS
segments have been allocated the largest share of revenue, while a smaller share was allocated to the PSS segment. The 9 percent growth in Group revenue was mainly attributable to the CSS and PSS segments. While IPC segment revenue remained stable, ATV segment revenue decreased, despite the first-time consolidation of Cypress.

The gross margin for the third quarter stood at 27 per cent, compared to 34.5 per cent in the previous quarter, whereas the adjusted gross margin improved from 35.6 per cent to 35.9 per cent. The Segment Result declined to €220 million, compared to €274 million for the preceding three-month period. The segment result margin fell from 13.8 per cent to 10.1 per cent.

“The non-segment result for the three-month period was a net loss of €313 million, compared to a net loss of €48 million in the previous quarter. The significant increase was attributable to amounts recorded in conjunction with the acquisition and first-time consolidation of Cypress mainly related to the purchase price allocation,” read Infineon’s official statement.

It continued, “The non-segment result for the third quarter included €193 million of
cost of goods sold, €79 million of selling, general and administrative expenses and
€8 million of research and development expenses. In addition, net operating expenses amounting to €33 million were recorded.

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