Infineon Technologies AG announced their first quarter in fiscal 2003 year financial results a number of days ago. Needless to say that like all large DRAM memory makers the company had to declare losses, but, it is needed to be pointed out that the losses have shrunk compared to the year before, so, it seems that the company manages to improve its financial position and if the demand and prices on DRAM memory raise this year, Infineon, just like others, will even be able to earn profits.

The company had revenues of Euro 1.52 billion, an increase of 10% sequentially and 47% year-on-year. The revenue increase was mainly driven by higher demand for memory products and semiconductors used in mobile phones and the continued strong performance of the automotive & industrial segment. The revenue increase also reflects the first time consolidation of a full quarter of revenues of Ericsson Microelectronics, which Infineon acquired in September 2002. Quarterly EBIT (earnings before interest and taxes) was a loss of Euro 31 million, a strong improvement from a loss of Euro 292 million in the previous quarter, which included exceptional effects of 119 million Euro, and from a loss of Euro 564 million in the first quarter of the last fiscal year. The improved earnings performance was mainly due to further cost reductions in the memory product segment and a shift in sales towards higher margins products.

Net loss amounted to Euro 40 million compared to a net loss of Euro 506 million in the previous quarter, which included a non-cash charge of Euro 275 million to establish a deferred tax valuation allowance. The first quarter tax expense continues to reflect a valuation allowance for tax losses incurred in certain tax jurisdictions according to US GAAP. Basic and diluted loss per share for the first quarter of fiscal year 2003 was Euro 0.06, improving from a loss per share of Euro 0.72 in the previous quarter and Euro 0.48 year-on-year.

What is not good is that expenditures for Research and Development in the first quarter totaled Euro 265 million, or 17% of sales, down from Euro 292 million sequentially. The reduction is principally due to in-process research and development charges in the previous quarter of Euro 37 million. SG&A expenses totaled Euro 172 million or 11% of total revenues, compared to Euro 163 million or 12 percent of total revenues in the previous quarter.

Infineon’s gross cash position, representing cash and cash equivalents, marketable securities, and restricted cash, amounted to Euro 1.6 billion, down sequentially from Euro 2 billion. The decrease in gross cash was mainly due to investments for 300mm volume production and for the introduction of the next shrink to 0.11 micron technology.

Revenues outside Europe constituted 54% of total revenues, up from 53% in the previous quarter, reflecting Infineon’s increased market penetration in Asia and Japan. As of December 31, 2002, Infineon had approximately 30 900 employees worldwide, including about 5 400 engaged in research and development.