Infineon called the top of the semiconductor cycle on Tuesday, as the German chipmaker returned to profit for the year to the end of September after three years of losses.

“We have already passed the high point of the current semiconductor cycle and we expect market growth in the coming calendar year to fall well short of this year's figures,” said Wolfgang Ziebart, chief executive, in his first public appearance since taking over in September.

The company said it was seeing signs of a slowdown in demand in several markets, and expected sales and earnings to fall in the current quarter, the first of its new financial year.

Think-tanks and industry players are expecting this year's 30 per cent growth in global semiconductor sales to slow dramatically in 2005. Some forecast shrinkage again in 2006.

Last month, Philips, the Netherlands-based chipmaker, warned of flat chip sales over the next few quarters, while Intel of the US said profit margins had suffered due to an oversupply of microchips for personal computers. Taiwan Semiconductor Manufacturing, the world's largest contract chipmaker, also warned that revenue would decline in the fourth quarter.

Improved conditions and prices helped Infineon, the world's seventh largest maker of memory and other chips, to a 17 per cent rise in sales to €7.2bn ($9.3bn) for the past year. Earnings before interest and tax totalled €256m, in spite of impairment and antitrust charges of €345m, but remained low given the huge investment needs in a cyclical and capital-intensive sector.

Infineon said it was seeing indications that several markets were slowing down in the current three months, traditionally a strong quarter due to end-of-year and holiday sales.

Chips for the automotive industry, for instance, face continuing price pressure, with no sign of changes in demand. Sales of chips for mobile phones are expected to fall, due mainly to a market slowdown and higher inventories in the Asian mobile phone market.

Fourth quarter operating profits at Infineon's D-Ram unit, which makes memory chips for computers and generates about 40 per cent of group sales, rose 11 per cent to €149m, and has continued to lower costs per chip. Mr Ziebart said he would seek to prepare the company for the coming downturn through unspecified further savings and a fresh focus on profitability a departure from his predecessor's emphasis on growth.

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