Infineon Technologies is to slash investment in new factories which make chips for mobile phones and car entertainment systems.
The company confirmed that it would no longer invest in facilities that produce non-memory products, which generate most of its sales, as the sector has failed to rebound in the IT recession.
Chief executive Ulrich Schumacher told Reuters at this year's European Technology Roundtable Exhibition in Seville that the company would not make any more manufacturing investments.
He added that if demand for such logic circuits improved the company would use contractors to make the surplus.
But he added that the company will continue to manufacture its own memory chips, the standard processors used in PCs, which generate between 25 and 40 per cent of its sales.
Infineon has just installed expensive state-of-the-art production equipment for memory chips.
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