Infineon Technologies AG shares plunged after its fourth-quarter margin outlook missed estimates and the German chipmaker said that costs, including new investments and expenses for equipment sitting idle, had increased.
The segment result margin, an adjusted measure of profitability that excludes extraordinary items, is expected to be 25% in the fourth quarter, Infineon said in a statement on Thursday. That compared to analysts’ 26% estimate, according to the average forecast in a Bloomberg survey.
Third quarter margins also fell from the previous period, and the outlook for potential declines in profitability is worrying investors, Jefferies analyst Janardan Menon said in a note. Falling margins in the company’s key automotive segment are of particular concern, he said. Infineon Chief Executive Officer Jochen Hanebeck called the semiconductor market a “mixed picture.”
“On the one hand, in electromobility, renewable energy and related application areas, demand has stayed high,” Hanebeck said in the statement. “On the other hand, demand for consumer applications, such as PCs and smartphones remains low.”
Shares fell 7.8% at 11:17 a.m. in Frankfurt trading after earlier falling as much as 12%, the biggest intraday decline since March 2020. The stock has gained about 25% this year.
The company also said on Thursday that it would invest as much as €5 billion ($5.5 billion) in the next five years to expand its plant in Malaysia to produce power chips that feed the automotive industry. The company said that demand from carmakers would help the plant produce potential revenue of about €7 billion by the end of the decade.
Read More: Infineon to Invest Up to €5 Billion in Malaysia Site Expansion
The investment in the Malaysia plant is the latest commitment Infineon has made to expand its production. Infineon is also planning a €5 billion project to expand the company’s Dresden facility with subsidies from the German government.
(Updates with additional context throughout)
