GERMAN chipmaker Infineon has settled a more than decade-long legal dispute over insolvent former unit Qimonda, agreeing to pay a higher than initially planned 753.5 million euros (S$1.1 billion), both companies said late on Thursday (Aug 22).
The settlement with Qimonda insolvency administrator Michael Jaffe will not affect Infineon’s operating profitability, a company spokesperson said, adding that it had already taken provisions amounting to 221 million euros over the case.
While the settlement will weigh on earnings and cash flow from discontinued operations, according to the chipmaker’s overnight statement, the spokesperson said it will not restrict Infineon’s ongoing business and the group has enough funds for dividends and investments.
The bill for the chipmaker is much less than the 3.35 billion euros initially demanded by Qimonda, RoboMarkets analyst Juergen Molnar said, although it was more than the amount that Infineon had set aside.
“The bottom line is rather at the more expensive end for Infineon, but at least it’s an end and therefore time for management and shareholders to concentrate on the operational business,” Molnar said.
Jaffe had sued Infineon in 2010 for 3.35 billion euros, arguing the chipmaker had transferred operations to it at an inflated price. So far, he has won 1.2 billion for Qimonda creditors in total.
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Qimonda was spun off from Infineon in 2006 but collapsed in 2009 after chip prices plunged, and it had to file for insolvency after failing to hammer out details of a rescue package with its parent company.
The administrator added that the conclusion of insolvency proceedings will be possible in 2025, with substantial dividends for the creditors.
Infineon’s stock opened 1 per cent lower but then pared losses and was down 0.2 per cent by 1018 GMT.
A local trader noted the initial negative reaction should not hold, as the legal matter is now solved and the market is more focused on Infineon’s continued operations. It would also not need new money for the settlement. REUTERS
