(Bloomberg) -- Infineon Technologies AG fell the most since November after the German chipmaker cut its outlook for the year, citing global economic uncertainties and a slowdown in car sales in China.
“A number of end-markets continue to be sluggish,” Infineon said in a statement Wednesday. “In particular, the trend of declining vehicle sales in China has accelerated in February, causing dealer inventories to increase sharply.”
Infineon fell as much as 8.8 percent in Frankfurt after the news, the steepest intraday drop since Nov. 12.
Infineon expects to grow sales 5.3 percent to 8 billion euros ($9 billion), plus or minus 2 percent. It’s the second time the company has revised its forecast in less than two months after saying in February it expected sales growth of 9 percent.
While there’s very little data pointing to a turnaround this fiscal year, "if the market turns, we’re well positioned to accelerate again," Chief Executive Officer Reinhard Ploss said on a call with analysts.
The outlook for chipmakers remains mixed, after Apple Inc. shook investors in early January with a warning, while the ongoing tensions over trade talks between the U.S. and China continues to knock investor confidence. Neubiberg, Germany-based Infineon, which competes with NXP Semiconductors NV and STMicroelectronics NV, is trying to offset declines by pushing into the growing market for electric cars and renewable energy that provides fresh revenue streams as demand for semiconductors used in smartphones and tablets slows.
China’s booming auto and clean-energy markets have fueled Infineon’s growth in recent years. The company has bet on the growth of electric and hybrid vehicles in the country, and last year teamed up with SAIC Motor Corp Ltd. -- one of the biggest Chinese carmakers -- to jointly produce power modules for domestic auto manufacturers.
New vehicle insurance registrations in China were down 41 percent year-on-year in February, analysts at Bernstein said in a research note, adding that they have turned increasingly cautious on the semiconductor industry into the second half of the year.
(Updates with Infineon China presence in fifth paragraph, CEO comments.)
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