Infineon Plans IPO for Memory Biz

By Suzanne Deffree -- Electronic News, 2/17/2006

Infineon Technologies AG CEO Wolfgang Ziebart Thursday prepared company shareholders for an initial public offering of the Munich-based company’s memory business.

Ziebart, addressing Infineon shareholders at the company’s Annual General Meeting, said the planned spinoff of the memory business will not be in the form of a subsidiary, but a completely independent company.

Originally, Infineon had said it planned to keep the memory business under its wings. When announced in November 2005, Ziebart said an IPO was possible, but did not elaborate on that likelihood.

The move outlined yesterday will see the creation of two distinct businesses, a to-be-named memory company and Infineon, which will put its focus on logics. The new company will start off as an Infineon wholly owned subsidiary on July 1 with a floatation to follow, retain its operational headquarters in Germany, and see Kin Wah Loh, a member of Infineon’s management board and currently responsible for memory products, placed at the helm.

Thursday’s announcement also came as news to shareholders, who were not offered the opportunity to vote on Infineon’s plan to leave the memory market. Ziebart said Infineon considered putting the move up to vote, but decided against it, as a vote could slowdown or even block the separation.

Memory, which contributes about 40 percent of the European chip giant’s sales, has been on the down slope. Ziebart presented figures that showed Infineon as number four in DRAM sales revenue and a 50 percent price decline for memory products in 2005.

“There is no doubt we are not where we want to be in every area,” the CEO said.

Ziebart continued to say that the company’s traditional integrated business model, which has seen it cut down on manufacturing investment in the past by converting memory production into logic production, is not working in today’s market. “Looking to the future, we can see new technologies for memory products are now released simultaneously with logic products, rather than consecutively.”

The move to IPO the memory business also means the new company will not necessarily be listed in Germany. All of the top memory players, including Samsung and Micron, are currently listed in Asia or the United States.