European chip firms see market and revenue growth

Europe’s two largest semiconductor companies, STMicroelectronics and Infineon Technologies, are expecting an excellent year with the market growing, prices increasing and margins improving.

ST’s CEO, Pasquale Pistorio, is expecting second quarter revenues to increase by between six and twelve per cent compared to Q1, and this would translate into a year-on-year growth of between 26 per cent and 33 per cent.

Infineon’s acting CEO, Max Dietrich Kley said he expected revenues and profitability to improve during the next two quarters as the semiconductor industry moved into an upswing-phase.

“Judging from the current demand in our logic business, as well as our production plans, and the price developments in Memory Products, we expect continued growth in revenues for the rest of fiscal year 2004,” said Kley.

“We expect 2004 to be a year of progressive growth in revenues and profitability for ST,” said Pistorio, adding, “second quarter gross margin is expected to be about 37 per cent.”

As a result, ST is upping its capital spending programme this year from the budgeted $1.6bn to $2.2bn. Half of this will be spent on technology and R&D programmes.

Both companies have already increased R&D spend in the Q1 over Q4 last year, each spending some 17 per cent of sales. Infineon spent €304m in Q1 compared to €283m in Q4 and ST spent $363m up from the $283m of the previous quarter.

ST had a double digit year-on-year growth in all its market segments except the computer segment, while Infineon had growth in all its business groups, led by 25 per cent in secure mobile systems and nine per cent in memory.