* Targets operating margin of 17 pct vs 15 pct previously
* Automotive to be main growth driver - CEO
* Fourth-quarter operating profit 280 mln euros
(Adds CEO, CFO, analyst comment, background, updates shares,)
By Harro Ten Wolde
FRANKFURT, Nov 23 German chipmaker Infineon
raised its medium-term profitability target on
Wednesday, banking on strong growth in its automotive business
as carmakers invest heavily on electric and self-driving
The increased operating margin target outweighed a cautious
annual revenue forecast and Infineon shares traded 1.6 percent
higher at 16.69 euros by 1100 GMT, having gained more than 20
percent this year.
Automotive is fuelling merger deals in the chip sector. NXP
Semiconductors, the largest supplier of chips to the
industry, agreed to a $38 billion takeover by Qualcomm Inc
last month, the biggest deal so far in the sector.
Car makers including Volkswagen are rushing to
develop electric and self-driving cars, pushed by tougher
anti-pollution rules and the emergence of new competitors from
the technology sector such Alphabet's Google.
"Autonomous driving is one of the main drivers of our
industry, an area where we play a key role," Chief Executive
Reinhard Ploss said at the company's news conference in Munich.
Infineon's chips activate car airbags, enable cruise
control, manage power supplies and cut vehicle emissions.
Infineon is the world's second largest semiconductor
supplier to the automotive sector, with a market share of 10.4
percent according to Strategy Analytics, behind NXP which has
Its automotive unit, which makes high-margin chips used by
carmakers including Tesla and Hyundai as
well as auto suppliers Continental and Bosch
, will grow faster then the rest of the group, which is
predicted to grow around 6 percent this year.
As a result, the group's operating margin will likely hit
around 17 percent in the 2017/18 fiscal year if market
circumstances remain normal, Finance Chief Dominik Asam said.
The previous forecast was for 15 percent.
Infineon reported a 2 percent drop in operating profit,
excluding special items, for the quarter ending Sept. 30 to 280
million euros ($298 million).
That was slightly below the 285 million euro average
forecast in a Reuters poll in which estimates ranged from
272-293 million euros.
For its fiscal year ending in September 2017, Infineon said
it expected revenue to rise some 6 percent with an operating
margin of about 16 percent.
A 6 percent rise would mean revenue of 6.86 billion euros,
below the most pessimistic forecast in the Reuters poll.
"The weaker-than-expected guide for 2017 reflects a weaker
environment in security and PMM (power management) but doesn't
affect our thesis, centred on autos and industrials," said
Bernstein analyst Pierre Ferragu in a client note. Bernstein has
an "Outperform" rating on the stock.
($1 = 0.9408 euros)
(Editing by David Clarke/Keith Weir)