Infineon cheers up a bit

German chip maker Infineon appears to have finally cheered up a bit after its revenue did not drop as much as it expected.

The highly precise chip maker had expected its revenue to drop by nine percent, but actually it only fell by five.

The reason for the better than expected results was that carmakers were buying a lot of chips hoping higher-spec models in China will offset flagging demand in Europe.

Infineon’s chips activate airbags, enable cruise control and cut emissions and apparently carmakers are trying to push them on China’s newly wealthy.

Infineon said it expected its 2013 revenue to come in at the high end of its previous target range of 3.56-3.71 billion. The company also said its 2013 core operating profit margin would reach the upper end of its five to nine percent range.

Chief executive Reinhard Ploss said that things were finally getting better. His order books were filling up although there was a little too much short term business for him to be truly at peace with his inner child and its wallet.

His enthusiasm is similar to statements made by other chip makers. Texas Instruments forecast growth for the current quarter on improving demand for its chips.

The automotive industry is still more depressed than Robert Smith at a Justin Bieber concert, particularly in Europe. But Infineon said revenue levels had recovered at its automotive unit, which accounts for about half of its revenue.

This was mostly because the cars on the road need a ton of chips to be safer, cleaner and more energy efficient. This is even more important in the premium cars which auto makers are selling to Chinese Communist party leaders.

Reuters pointed out that a Credit Suisse survey last month showed sales by Chinese luxury car dealerships increased 17-22 percent during the first quarter and the analysts said they expected luxury brands in China to maintain strong sales in 2013.

Infineon also said it expects revenue for the current fiscal third quarter to be around 1 billion, with an operating margin of around 10 percent.