Infineon expects first quarter revenues and earnings to fall below market expectations. In a profit warning yesterday, the German chipmaker blames client inventory build-up, which aggravated by the sharp decline of the US dollar.

The German chipmaker now anticipates earnings before tax and interest of €211m and revenues of approximately €1.82bn. This includes €118m from the settlement of a licence dispute with ProMOS, the company's former Taiwanese partner.

The announcement also signals turbulence within the European semiconductor market which has been reeling from the weakness of the US dollar. On Monday, STMicroelectronics, Europe's biggest chipmaker, said its fourth quarter revenues were likely to come in at the higher end of its previous guidance, although gross margins would probably be lower than expected.

The Franco-Italian company forecast net revenues for the three months to 31 December of $2.3bn, 4.3 per cent higher than the previous quarter and at the high end of an earlier forecast. Gross margins are expected to come in at around 36.6 per cent, well behind its earlier guidance range of 38 percent to 39 per cent.

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