FRANKFURT (Reuters) - German chip maker Infineon Technologies gave bullish guidance for fiscal 2019 on Friday, saying it expected revenue growth to accelerate to at least 10 percent thanks to a strong order book and a strengthening U.S. dollar.
It also raised its forecast for average annual growth beyond 2019 to 9 percent from 8 percent.
Munich-based Infineon already nudged up its revenue guidance for fiscal 2018 last month, forecasting an increase of 4 to 7 percent after second-quarter earnings topped expectations thanks to demand from automotive and industrial customers.
It said on Friday it was stepping up its spending plans to keep up with growth, raising the proportion of annual revenues it intends to invest on average to 15 percent from 13 percent and saying it would temporarily exceed that ratio due to further one-off investments.
It said it would spend an additional low three-digit million euro sum to exploit additional business opportunities and react appropriately to structural changes, without being more specific.
It also intends to invest around 700 million euros ($823 million) in front-end cleanrooms and larger-scale office buildings over the next five years, which includes some of the facilities at a planned new 1.6 billion euro chip facility in Austria.
By the middle of the next decade more than half of its power semiconductors will be manufactured on 300 mm wafers in Dresden, Germany, and the factory in Villach, Austria, Infineon said.
In addition, it said it aimed to gradually improve the margin on its segment result, a measure of profitability across Infineon’s operating units, from its current target level of 17 percent by ensuring that operational expenses grow more slowly than revenues.
Shares in the group turned positive after the announcement, trading up 0.9 percent at 24.79 euros by 1401 GMT, putting them among the biggest gainers in Germany’s blue-chip index.
Reporting by Edward Taylor and Maria Sheahan; Editing by Adrian Croft