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Infineon to slash 1,400 jobs globally and move 1,400 roles in major cost-cutting move

by August 5, 2024
written by August 5, 2024

Infineon Technologies, the leading German chipmaker, announced on Monday plans to cut 1,400 jobs globally and relocate another 1,400 positions to countries with lower labour costs. This decision is part of a previously announced cost-savings programme to improve operational efficiency and reduce expenses.

The job cuts will include several hundred positions at Infineon’s plant in Regensburg, located in southern Germany, which had been previously announced.

The relocation of jobs is intended to shift operations to regions where labour costs are significantly lower, thus allowing the company to maintain competitiveness in the highly competitive semiconductor market.

Infineon’s decision comes when the semiconductor industry is experiencing rapid changes and facing various challenges.

The global demand for semiconductors has surged, driven by the proliferation of technologies such as artificial intelligence (AI), electric vehicles, and advanced telecommunications.

This demand has also highlighted vulnerabilities in supply chains and the need for companies to optimise their operations to remain competitive.

Major tech firms’ shares plunge

The announcement of Infineon’s cost-saving measures coincided with a significant sell-off in Taiwan’s stock market.

The Taiex index fell more than eight per cent on Monday, closing at 19,830.88, driven by recession fears following poor US jobs data.

Major tech firms, including Amazon and Microsoft, experienced substantial losses, contributing to the market downturn.

Taiwan Semiconductor Manufacturing Company (TSMC), a key player in the global semiconductor industry, saw its shares drop by 9.3 per cent.

TSMC, which controls more than half of the world’s output of silicon wafers, has been a major beneficiary of the AI-driven tech rally.

The company briefly surpassed the $1 trillion market capitalisation mark in July, positioning it ahead of Tesla as the seventh most valuable technology firm.

TSMC’s performance and outlook

Despite the recent market volatility, TSMC reported robust financial performance.

Profits jumped more than a third in the second quarter of 2024, with revenues rising 32 per cent year-on-year to $20.82 billion.

The company expects third-quarter revenue to reach $23.2 billion, surpassing analysts’ expectations.

TSMC’s major clients, including Apple, Nvidia, and AMD, are central to the current explosion of generative AI products, spurred by the success of technologies such as ChatGPT.

However, concerns about the sustainability of the AI-fuelled rally have led to speculation that tech stock valuations may be too high, potentially prompting a market correction.

Infineon’s job cuts and relocations are part of a broader strategy to enhance efficiency and remain competitive in the dynamic semiconductor industry.

Meanwhile, the recent market sell-off in Taiwan reflects broader economic uncertainties and concerns about tech stock valuations.

As the semiconductor industry continues to evolve, companies like Infineon and TSMC must navigate these challenges to sustain growth and profitability.

The post Infineon to slash 1,400 jobs globally and move 1,400 roles in major cost-cutting move appeared first on Invezz

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