Qimonda's Memory Chip Spin-off Is So Far a Financial Failure

Qimonda is a new company, intended to be the world's fourth largest manufacturer, created by the German semiconductor maker Infineon to spin-off its memory chip business. In its fiscal third quarter, the Munich manufacturer had to suffer from Qimonda's poor performance. In this quarter, the net loss grew to no less than 197 million euro. A year earlier, the net loss for the same quarter was only 23 million euro.

The increased loss was also caused by the restructuring charges, but the main contributor remains Qimonda. This is somehow surprising, if we take into consideration the fact that Qimonda had a profit of 54 million euro the year before. The third-quarter revenue of the memory-chip maker had plunged 24 percent to 740 million euro. Infineon posted earnings before interest and taxes of 13 million as well as reporting third-quarter revenue of 1 billion in the third quarter, but all these without taking Qimonda into account.

The new Qimonda project was a way for Infineon to put its volatile DRAM operations into a different area than the one they considered to deserve closer attention, such as security systems, automotive electronics or the chips for mobile phones. That would have seemed a good move as it's a known fact that in the DRAM producing business, competition is very fierce.

The DRAM chips are used especially as the main memory in personal computers but also in many other products. The DRAM producing business has also been a subject of intense price pressure in latest years.
Anyway, Infineon expects its revenue to increase in the four quarter because of the demand from the mobile phone producers.

A year ago, when the Qimonda plan was announced, Infineon's CEO Mr. Wolfgang Ziebart had also declared that Infineon plans no other spinoffs.