Infineon, a German chip manufacturer, has adjusted its full-year revenue guidance and expects lower revenue for the second quarter than what the market was anticipating.
The company cites weak demand in the semiconductor industry as the reason for the decline in revenue. Infineon now expects full-year revenue of €16 billion, plus or minus €500 million, compared to its previous estimate of €17 billion. The company also lowered its assumed exchange rate from $1.05 to $1.10, which accounts for half of the decline in forecasted revenue.
The company’s adjusted margin for the year is expected to be in the low to mid-twenties percentage range, instead of around 24% as previously guided. Infineon’s automotive segment also experienced a decline in revenue in the first quarter of the fiscal year ending December 31, 2019. Despite this, the company has maintained its full-year forecast, even with a slowdown in demand from the electric vehicle sector outside China.
Infineon shares in Lang & Schwarz premarket trade were down approximately 5% following this announcement. The semiconductor industry has been under pressure lately as global economic woes continue to impact demand for chips used in products such as tablets, cellphones, and cars. Infineon’s second-quarter revenue forecast of €3.6 billion is lower than market expectations of €4.02 billion and is consistent with updated guidance from peers STMicroelectronics and Texas Instruments last month.
CEO Jochen Hanebeck said, “In consumer, communication, computing, and IoT applications, we are not anticipating a noticeable recovery in demand until the second half of the calendar year.”