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Investing.com — Shares in European chipmakers rose in early trade on Wednesday after Germany’s Infineon Technologies (ETR:IFXGn) raised its sales and profit forecasts for the year, thanks to buoyant demand from its core clients in the carmaking industry.
Infineon said “resilient business dynamics in its core automotive and industrial division” mean that sales will be above €4 billion (€1 = $1.0833), rather than the €3.9B it had previously forecast. That, combined with a fall in energy prices and a higher percentage of more valuable chips in its sales mix, will push the company’s operating margin toward 30%, compared to a prior forecast of 25%.
For the full year, Infineon said it now expects sales to be “meaningfully above” its earlier forecast of €15.5B “with a corresponding positive impact” on operating margins.
The upgrade will encourage belief that the industrial sector in Europe’s largest economy may have turned a corner, after spiking energy costs forced a sharp slowdown in 2022, choking off the post-pandemic recovery. The automotive sector accounted for 45% of Infineon’s sales last year, while industrial process control chips accounted for another 13%.
By 03:55 ET (07:55 GMT), Infineon stock was at a six-week high, up 7.2%, making it the best-performing stock in the Euro Stoxx 50 and the Geman DAX on the day.
The news also lifted the stock of STMicroelectronics (EPA:STMPA), another big chip supplier to Europe’s carmakers. It rose 4.9%, back towards the 20-year high that it hit earlier this month.
Infineon’s upgrade, which came after the close on Tuesday, was echoed by one from U.S. memory chip maker Micron (NASDAQ:MU), which also raised its sales forecast for the current quarter. Micron had nonetheless announced further job cuts to address the current glut in the market for memory chips.
