German semiconductor maker Infineon Technologies, Tuesday damped speculation that it could be part of merger and acquisition activity in the sector any time soon.

"There is no pending merger and acquisition discussion," Infineon's new Chief Executive Peter Bauer said at an investors day, following recent market speculation that Infineon could merge with European peer NXP Semiconductors.

Analysts and industry insiders have said recently that a planned joint venture combining the wireless-chip-making activities of European semiconductor companies STMicroelectronics and NXP could hasten further consolidation in the $30 billion market for mobile chips,

Scale among semiconductor makers is becoming increasingly important in serving mobile handset makers, where the top five vendors now account for over four-fifths of the market, according to research firm Gartner.

The creation of the joint venture, which will be the third-largest wireless chip maker behind U.S. giants Qualcomm and Texas Instruments, is expected to force smaller rivals such as Infineon, MediaTek, Freescale Semiconductor and Broadcom, to consider merging or selling off their wireless activities.

In later April, after the merger was announced, an Infineon spokesman said the company, the next largest wireless semiconductor maker after the STMicro joint venture, is strong enough to be successful on a stand-alone basis.

Bauer reiterated that view Tuesday, his third day in office after he replaced Wolfgang Ziebart as head of the Neubiberg, Germany-based firm June 1.

According to the company, Ziebart left due to differing opinions about the company's strategy, but Bauer said Tuesday Ziebart's resignation wasn't linked to any merger and acquisition discussions.

Bauer also said Tuesday that the company's restructuring program, dubbed IFX 10-Plus, should lead to "triple-digit million euro" savings in the 2009 fiscal year ending Sept. 30, 2009.

Analysts at Credit Suisse described the savings figures as positive and retained their buy rating on the stock with a target price of EUR10.

Sal. Oppenheim analyst Jürgen Wagner said Infineon was short of details on its cost saving program, andr has a reduce rating on the share with a EUR5 target price.

Still, Infineon shares rose strongly Tuesday after Bauer's comments to close up 8.0% at EUR6.10 in a flat overall German market.

Last Thursday, Infineon lowered the outlook for its communication solutions, or COM, unit due to lower sales volumes and a delay in two projects, leading to a 10% slump in its share price.

Chief Financial Officer Marco Schroeter said Tuesday he now expects fiscal 2008 revenue growth to be in the mid-to-high single digit range compared with a year earlier, down from earlier expectations of high single digit growth.

However, Schroeter reiterated the company's margin target for the current fiscal year ending Sept. 30. The margin on earnings before interest and taxes is expected to be in the low-to-mid single-digit range, Schroeter said. Infineon's outlook excludes Qimonda, in which it has a 77.5% stake which it plans to reduce to below 50% by early 2009.

Infineon said it expects a better performance from its two units in fiscal 2009. It said it expects the margin on earnings before interest and taxes, or EBIT, excluding items at its Automotive, Industrial and Multimarket, or AIM, unit to improve from 2008 levels, and revenue at its COM unit to also improve.

Source:Dow Jones