Infineon, which runs its business year from October to September, said in a statement it booked net loss of 116 million euros (131 million dollars) in the three months to June.

That represented a substantial improvement from the second quarter, when Infineon had sustained net loss of 328 million euros.

But it was nevertheless wider than the loss of 76 million euros reported in the third quarter of last year.

Chairman Ulrich Schumacher said in an interview published in the Wall Street Journal Europe that Infineon expected to return to profit in the fourth qarter of the current year.

"We're aiming for profitability in the next quarter," he said. "Barring any negative outside influences, I think it's a goal we should be able to reach."

In the period from April to June, the strong quarter-on-quarter improvement was mainly due to "increased productivity, further cost-cutting and no significant inventory valuation effect compared to the previous quarter," Infineon said.

Underlying losses, as measured by earnings before interest and tax (EBIT), also improved on a quarterly basis, narrowing to 115 million euros in the April-June period from a loss of 223 million euros in the second quarter.

But the EBIT loss was still wider than the 110 million euros booked a year earlier.

Third-quarter revenues totalled 1.47 billion euros, little changed from the preceding three months, but up by 11 percent year-on-year, Infineon said.

Chairman Schumacher said third-quarter business had been hit by the strong euro and ongoing price pressure.

"However, we achieved a solid revenue performance in most of our business groups and significantly reduced our net loss" on a quarterly basis, Schumacher said, adding that Infineon currently felt the market environment was "more positive", especially for DRAM memory chips.

"We have seen first signs of a positive market trend in the past three months and thus look forward with optimism for a stronger improvement of demand ... in the second half of 2003," Schumacher said.

"In the light of the continuing uncertainty of the global economic situation, which makes it difficult to predict consumer demand in our target applications, we will continue to implement our successful cost reduction and restructuring programs," he said.

Schumacher told the Wall Street Journal Europe that for the whole of the current business year, "we're cautiously optimistic, but still reluctant to predict a dramatic improvement."

And looking ahead to next year, "we're expecting solid growth," the chairman continued. "Whether it's the 15 percent analysts expect or in the 10 percent range is not important when you consider where we are now. Either way it would be a major improvement."

SPACE.WIRE