Fitch: BenQ's potential pullout from BenQ Mobile bad news for Infineon

Fitch Ratings said the decision by Taiwan-based BenQ Corp. to stop funding its German subsidiary BenQ Mobile GmbH, precipitating the insolvency of this business, would add to the challenges faced by Infineon Technologies AG in its communications division.

"Today's announcement is not good news for Infineon, which has been working to turn around its loss-making communication's division," Stuart Reid, a director in Fitch's European TMT team, said in an agency rating.

"BenQ only acquired the Siemens handsets business in 2005, and as recently as August 2006 affirmed its commitment to its mobile phones business. As Infineon's single largest customer, the potential closure of BenQ Mobile's German operations would be expected to have an impact on Infineon."

Fitch also noted that despite the leveraged buyout market's current appetite for transactions in the technology sector, particularly semiconductors, it does not see a potential private equity deal involving Infineon's memory spin-off, Qimonda, as a likely candidate.

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