Chips 'may have ended sales slide'

GERMAN giant Infineon is still selling its computer memory chips at a loss but has hinted that the market may finally have bottomed out. Europe's second-largest chip maker, which was spun out of engineering group Siemens in 2000, said it had seen the 'first positive signs of increasing demand', especially for chips for mobile phones and computers.

However, it cautioned that there was unlikely to be a sudden return to high growth and there were 'no clear signals for a sustainable overall market recovery'. Strong pricing pressure would continue.

There was also grim news for fixed-line and fibre optic suppliers as Infineon warned conditions in the fixed-line telecoms market were still in freefall. Sales of its so-called wireline unit tumbled 41% on the previous quarter to e83m (£50m).

Quarter-on-quarter group losses to 31 December narrowed 37% to e331m, although sales were down 5% on the previous three months to e1.03bn. Wireless telecommunications chip sales rose 15% e206m, and memory sales rose 18% to e285m.

Memory prices have more than doubled in recent months as the market anticipates consolidation.