Infineon and AMS Warn Investors as Demand Hits Europe Tech

(Bloomberg) -- Infineon Technologies AG and AMS AG have warned investors about future growth, adding to investor concerns about prospects for chipmakers and Apple Inc. suppliers.

Infineon said Tuesday it sees revenue growth at the lower end of the forecast range in the 2019 financial year, and plans to reduce investments.

AMS, which supplies sensors to companies including Apple, said it would suspend its cash-dividend policy and scrap numerical year-ahead guidance as its first-quarter revenue forecast missed analysts’ estimates. Nordic Semiconductor ASA, a wireless chip company, also reported a loss wider than analyst estimates.

"After a great run for semis over the past couple of years, 2018 ends on a whimper as demand headwinds start to take hold," Timothy Arcuri, an analyst at UBS Group AG, wrote in a note.

Shares in AMS fell as much as 16.6 percent in early trading, and Nordic Semiconductor dropped as much as 12.4 percent.

Despite the drop in forecast, Infineon shares rose just under 2 percent, with the company’s quarterly results not as weak as investors feared. Earlier in January, rival STMicroelectronics NV forecast a drop in first-quarter sales, but shares rose off the news, signaling the slowdown in demand that’s weighing on iPhone suppliers may not be as bad as feared.

"The current market environment is showing high levels on uncertainty," Infineon Chief Executive Officer Reinhard Ploss said on a call with analysts. Infineon will monitor supply and demand "very carefully,” he said.

Results from tech companies remain mixed, after Apple shook investors in early January with a warning, while the ongoing tensions over trade talks between the U.S. and China continues to knock investor confidence.

Neubiberg, Germany-based Infineon, which competes with NXP Semiconductors NV and STMicro, is pushing into the growing market for electric cars and renewable energy that provides fresh revenue streams as demand for semiconductors used in smartphones and tablets slows.

Infineon expects year-on-year revenue to increase 9 percent, based on an exchange rate of $1.15 per euro. Sales in the fiscal first-quarter amounted to 1.97 billion euros ($2.25 billion), meeting analysts estimates. However. the chipmaker said it will reduce planned investments in 2019 to about 1. 5 billion euros, from a range of about 1.6 billion euros to 1.7 billion-euros. It’s sticking with a plan to build a new production facility in Villach, Austria.

Infineon and AMS Warn Investors as Demand Hits Europe Tech

The Austrian-based chipmaker AMS said it’s expecting first-quarter revenue of between $350 million and $390 million on the basis of available information, reflecting “unexpected weakness” in customer demand in its consumer business.” That’s below analysts estimates of $404.5 million compiled by data compiled by Bloomberg.

AMS’s weaker forecast is due to a “current more unfavorable end market environment and subdued smartphone demand in addition to characteristic first-quarter consumer market seasonality,” the company said in a statement Tuesday.

It also decided to shelve a planned secondary listing of its shares in Hong Kong, citing no need for additional capital amid volatile markets. It expects to pursue the listing at a later point in time.

"The decline was driven by the weakness in the smartphone market and in particular lackluster demand for latest generation iPhones," Michael Foeth, analyst at Vontobel Holding AG, wrote in a note.

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