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Infineon raises full-year margin forecast, shares climb 7%

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By Supantha Mukherjee and Miranda Murray

STOCKHOLM/BERLIN (RockedBuzz via Reuters) – Infineon, a maker of chips used in cars and data centers, raised its full-year profit margin forecast on Thursday after reporting better-than-expected margins in the first quarter as strong demand from part of the automakers led to higher prices.

Shares of the German company, which gets 45% of its assets from automakers, rose 7%.

Automakers bought chips to shore up inventories after a global chip shortage over the past two years hampered production, benefiting companies like Infineon.

Demand for mobile devices and personal computers is expected to decline again this year after gaining significantly in the initial years of the pandemic. Chipmakers like Intel that depend on consumer electronics are forecasting a weak year.

But automakers have stepped up purchases to fill the gap left by slowing demand from PC and mobile device makers.

New car sales in Europe are expected to rise 5% to 9.8 million vehicles this year, despite broader economic uncertainty.

Infineon’s rival STMicroelectronics also forecast an upbeat year, citing strong demand from automotive and industrial customers.

Infineon’s quarterly adjusted margin, or “segment,” increased to 28% from 25.5% the prior quarter, beating expectations of 24.7%. The company raised its full-year segment margin forecast to 25% from 24%.

It maintained its full-year revenue forecast of around €15.5 billion, plus or minus €500 million, despite a less favorable exchange rate.

The company, which is looking for acquisitions to spur growth, said full-year capex should still be around 3 billion euros.

Some analysts have warned that demand from the auto industry could weaken as economic headwinds pick up.

“We remain of the view that the strength of automotive chips is unsustainable against a backdrop of weakening auto demand and rising inventories, with ordering and revenue trends likely to weaken once chips come out of shortage,” he said. said Jefferies analyst Janardan Menon.

($1 = 0.9084 euros)

(Reporting by Miranda Murray in Berlin and Supantha Mukherjee in Stockhom, editing by Rachel More and Mark Potter)

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