Infineon’s revenue has collapsed due to weak demand for electric vehicles and will lay off 1,400 people

Quarterly statistics from German chip manufacturer Infineon Technologies show two trends at once. First, demand for electric vehicles has not grown as quickly as expected, so revenue from sales of specialized chips has declined. Secondly, the long-suffering German industry in the current conditions cannot afford to maintain the same number of specialists, and therefore Infineon will reduce the number of personnel in Germany.

Image source: Infineon Technologies

In general, falling revenues and declining profit margins, as noted by Reuters, will force Infineon to lay off 1,400 people worldwide, and another 1,400 employees will move from Germany to countries with lower salaries, or corresponding rates will be offered to specialists in these countries after layoffs of German colleagues . The layoffs will include employees of the German company Infineon in Regensburg.

According to Bloomberg, the company faced a 9.5% year-on-year decline in revenue in the last quarter to 3.7 billion euros. Analysts had on average expected revenue of 3.79 billion euros, but the profit margin of 19.8% was in the same range they had expected. CEO Jochen Hanebeck said: “The protracted economic crisis has resulted in inventories exceeding actual market needs in many segments.” Simply put, demand for chips was below expectations.

In the automotive segment in particular, Infineon’s revenue fell over the year from 2.13 to 2.11 billion euros, and this was the company’s largest source of income. However, some revenue growth was consistently observed, as demand for cars with advanced software did increase over the period. For the current quarter, Infineon expects revenue of 4 billion euros, above analysts’ expectations, but its forecast for a revenue margin of 20% was lower than the 22% expected. The company’s shares fell in price by 3.4% after the publication of reports and news about upcoming staff cuts.