Infineon says chip supply situation “extremely tight”

German chipmaker Infineon Technologies said on Tuesday it was battling extreme tightness in its markets as the latest wave of the COVID-19 pandemic disrupts production in Asia and inventories hit all-time lows.

Results for the fiscal third quarter at the leading supplier of chips to the automotive industry reflected that tightness, with quarterly revenue growth of 1% lagging analyst expectations even as profit margins widened.

“Demand for semiconductors is unbroken,” CEO Reinhard Ploss said. “Currently, however, the market is faced with an extremely tight supply situation.”

Third-quarter revenue of 2.722 billion euros ($3.2 billion) was below the consensus of 2.767 billion euros in a poll of analysts by Vara Research. Profit margin widened to 18.2% from 17.4% in the prior quarter, beating a consensus view of 18%.

Infineon maintained its forecast for revenue in its fiscal year to Sept. 30 of 11 billion euros while slightly raising its guidance for segment result margin – a measure of operational profitability – to above 18%.

Ploss said inventories were “at a historic low; our chips are being shipped from our fabs straight into end applications”.

Under those circumstances, any government-imposed lockdowns – such as one in Malaysia where Infineon has a production site – are especially grave, Ploss added.

“We are doing our utmost to improve matters along the entire value chain and are working as flexibly as possible in the best interests of our customers,” said Ploss. “At the same time, we are continuously building up additional capacity.”