Asian investor for Qimonda in the offing

February 09, 2009 //

A Chinese semiconductor vendor might be interested in insolvent DRAM manufacturer Qimonda AG. And Infineon is heading for difficult times, admitted Max Kley, Infineon's supervisory board chairman. In a rare interview with Sueddeutsche Zeitung, the man who is said to be Infineon's grey eminence also aired his assessment of the European semiconductor industry situation.

MUNICH, Germany — A Chinese semiconductor vendor might be interested in insolvent DRAM manufacturer Qimonda AG. And Infineon is heading for difficult times, admitted Max Kley, Infineon's supervisory board chairman. In a rare interview with Sueddeutsche Zeitung, the man who is said to be Infineon's grey eminence also aired his assessment of the European semiconductor industry situation.

In the interview, Kley who pulled the strings in the demise of former CEO Ulrich Schumacher and Wolfgang Ziebart, said Infineon was in negotiations over the sale of its ailing DRAM subsidiary Qimonda with an "investor from a Chinese province". According to Kley, the talks lasted until January but were interrupted when Qimonda filed for insolvency. "The suitor disposes of sufficient capital and plans to establish a semiconductor fab in China," Kley said without however divulging the name of the prospective investor.

Kley added that due to Qimonda's insolvency proceedings, Infineon is no longer involved in the talks "Now insolvency administrator Michael Jaffé is doing that," he said. Indeed, the media here reported last week that after a visit in Portugal where he met representatives of the Portuguese government and other stakeholders for talks about the future of Qimonda's backend facility in Porto, Jaffé flew to Hong Kong to meet potential investors from that region.

In the interview, Kley also said that Infineon is heading for difficult times — not for operational reasons but as a consequence of the financial squeeze. Over the next two years, the chip maker has to refinance almost one billion euros (about $1.3 billion) of standing credits. Industry watchers believe that against the background of the global financial crunch this might render impossible. "In the crisis, everyone gets a problem if he writes red figures," acknowledged Kley. The redemption of bonds due until end of 2010 will be "difficult, but feasible", Kley said.

There have been talks on a possible merger with NXP and Freescale in the past, Kley also acknowledged. In both cases however, the negotiations failed since "every time we had advanced one step, the situation for the other player had deteriorated, and from our perspective, a partnership did not make sense anymore", Kley said. He added however, that Infineon can survive alone and the company will play "an active role in the consolidation" of the chip industry.

The manager also defeated the idea of a "European chip champion" which has been proposed by parts of the industry. "I don't think that this would be a good idea," Kley said, adding that Infineon "of course is also looking [for merger partners] in Asia".

The question of government aids is a central one for the chip industry, Kley said with respect to the ongoing discussion if the European semiconductor industry will be able to survive against Asian competition on the long run. "We need more public aid," he said, "Government research subsidies should not be restricted to renewable energies. We should not forget that the semiconductor industry is a key industry for many other industry branches, namely the automotive industry."

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