Infineon To Supply TPM To Xbox 360

August 31, 2005
Infineon will provide a wireless game-pad controller, a removable solid-state memory unit and an advanced security chip for the consoles, which are expected to go on sale in time for the Christmas shopping season.

The company did not give financial details of the deal.

By 0800 GMT, Infineon shares had risen 2 percent to 7.86 euros, the top gainer in a flat blue-chip DAX index.

But JP Morgan cut its price target for Infineon to 7.50 euros from 8 euros, saying weaker prices for DRAM chips were a more important factor than the Microsoft deal.

"It's good for validation of the company although in terms of dollar revenues we don't think it's going to be that massive," said analyst Uche Orji.

He estimated Infineon's revenues for the accessory chips would be in the low single-digit dollars per console. Microsoft has not given targets for how many Xbox 360s it wants to sell.

"In terms of their strategy of concentrating on higher-margin products it's a sign that that's bearing some fruit, but on its own it's a drop in the ocean."

Infineon's Chief Executive Wolfgang Ziebart, since taking over late last year, has said he would focus more on profitability and less on gaining market share in DRAM memory chips, which bring in around 40 percent of Infineon's sales.

Microsoft is expected to launch its new console worldwide in November, giving it a headstart in a battle with rival Sony's PlayStation3 and smaller competitor Nintendo's next-generation Revolution console, both due in 2006.