Infineon to axe 10% of its staff

Infineon makes chips used in mobile phones and hybrid cars

German chipmaker Infineon Technologies has unveiled plans to cut 3,000 jobs as the firm slashes costs to cope with a slowing economy and a stronger euro.

Accounting for about 10% of its total workforce, the job cuts were announced as Infineon reported a quarterly loss of 592m euros ($932m; £466.9m) to June.

The loss compares with a net profit of 192m euros in the same period a year ago and was much worse than expected.

Losses at its memory-chip unit Qimonda were largely to blame, the firm said.

Infineon is keen to sell the 77.5% stake it owns in Qimonda, which has been a drag on its business. The unit was classifed as a discontinued operation in Infineon's results to prepare for its disposal.

The Munich-based firm said it had cut the value of its Qimonda stake by 411m euros. This follows a previous a write-down of 1bn euros earlier in the year.

Radical measures

The group has also struggled as the euro has strengthened against the US dollar, making its exports more expensive.

In addition, weakening demand from key US clients is also taking its toll.

Infineon has launched a radical restructuring programme that aims to turn the company into a more efficient organisation and save about 200m euros a year.

This includes eliminating unprofitable product lines, reducing manufacturing costs and laying off 3,000 employees.

"Infineon must adapt its size to today's market conditions," the company said in a statement.

Infineon's shares have fallen sharply this year, but climbed 3.3% in afternoon European trading to 4.99 euros on hopes that its cost-cutting drive will position the business better for future trading.