Infineon to cut 1,400 jobs and move another 1,400 abroad amid forecasts slump
Chip manufacturer Infineon has announced plans for group layoffs at its plants worldwide, according to Reuters. Moreover, the German giant states openly that it intends to transfer some jobs to countries with lower labour costs.
Infineon has decided to lay off 1,400 jobs and move another 1,400 to countries with lower labour costs. The company previously announced a savings programme, which is related to its disappointing results. Reuters reports that several hundred positions will be cut in Regensburg, a city in southern Germany.
The chip manufacturer has lowered its forecasts for annual revenues twice this year. It currently states that they will amount to approximately £13 billion. The German company achieved a revenue of £3.2 billion in the second quarter of the year, which is almost £90 million less than estimated. Net profit was also lower at £354 million instead of £393 million.
- The recovery in our target markets is progressing slowly. The prolonged weak economic dynamics have resulted in inventory levels in many areas exceeding final demand, said Jochen Hanebeck, CEO of the German chip manufacturer.
Shifting production to "cheaper" countries
Infineon is not the only German company planning to move production to lower-cost countries. On the contrary, this phenomenon is gaining momentum.
The latest DIHK survey results indicate a growing trend among German businesses. They are increasingly considering limiting production in Germany or relocating it abroad. According to Die Zeit, the percentage of companies planning such actions has risen from 21% in 2022 to 37% currently. The situation is particularly worrying for large industrial enterprises employing over 500 employees—as many as 51% of them are considering moving production.
The main reason for this situation is the high energy prices in Germany. Entrepreneurs warn that despite a certain drop, electricity and gas costs remain uncompetitive compared to other countries, especially the United States. Additionally, companies complain about prolonged permit issuance processes, which hinder the expansion of their activities.
