"For the current quarter, we're more confident, as long as nothing dramatic happens on the memory chip side," particularly with regard to prices, chairman Ulrich Schumacher told a telephone conference with analysts following the publication of the group's third-quarter results.

Schumacher said a "significant improvement" in prices in Infineon's different business areas would likely be seen over the next two quarters, which would lead to an increase in sales and an improvement in operating earnings.

But he cautioned: "I wouldn't talk of a huge turnaround just yet... more a normalisation of the situation."

Detailing its third-quarter figures, Infineon said it managed to narrow its losses in the three months to June.

Infineon, which runs its business year from October to September, booked a net loss of 116 million euros (131 million dollars) in the third quarter, a substantial improvement from the second quarter, when the net loss had amounted to 328 million euros.

But it was nevertheless wider than the loss of 76 million euros reported in the third quarter of 2002.

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

Underlying losses, as measured by earnings before interest and tax (EBIT), also improved on a quarterly basis, narrowed to 115 million euros in the April-June period from a loss of 223 million euros in the second quarter but still wider than a loss 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 view 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," the chairman said.

In an interview published in the Wall Street Journal Europe, Schumacher said Infineon was "aiming for profitability" in the fourth quarter.

"Barring any negative outside influences, I think it's a goal we should be able to reach. We're cautiously optimistic, but still reluctant to predict a dramatic improvement."

The third-quarter figures were better than expected, but Infineon shares nevertheless fell sharply on the Frankfurt stock exchange as investors decided to take profits, traders said.

The shares fell to an intraday low of 10.56 euros, a decline of 0.66 euros or 5.88 percent from the closing price on Monday.

They subsequently came back off their lows to show a loss of 1.43 percent at 11.06 euros.

SPACE.WIRE