Infineon forecasts a gloomy 2012 for chip sales

CHIP MAKER Infineon has cut its sales forecast for its fiscal year 2012, claiming that customers are holding off on ordering from the firm.

Like all chip makers Infineon has been struggling with sluggish demand in the semiconductor industry during 2011. But when the firm forecasted its fiscal 2012 sales would drop by "mid-single-digit percentage", it was confirmation that things won't be getting better for the industry any time soon.

Both Infineon and Texas Instruments have cut their sales forecasts citing lower demand for chips. Bloomberg's survey of 23 analysts produced an estimate of a 1.8 per cent decline in sales for Infineon for the year ending 30 September 2012, enough to send the firm's share price tumbling by over 6 per cent in a single day.

In the short term Infineon painted an equally gloomy picture as it forecasted sales for the quarter ending 31 December 2011 to be down by 10 per cent. Not only will sales be down, but the firm also said there will be a decrease in operating margins.

Chip makers are often seen as a barometer of industry demand and general purpose chip makers such as Infineon, which makes chips for pretty much everything from automated machinery to smartphones, can be used to forecast inpending demand levels. Strong chip sales indicate demand for finished products, and comments coming from Infineon and Texas Instruments about their customers holding back orders show that consumers are feeling the strain on their wallets. µ