Infineon's share rose today as it announced plans to raise €450m in a share offering.
Infineon is up against two big challenges, the need to keep Qimonda, its loss-making DRAM subsidiary afloat, and the need to repay, or renegotiate, a €1bn bond loan this year.
Qimonda has been helped by a €150m assistance from the State of Saxony, augmented by a €75m promised cash injection by Infineon. That is probably enough to save Qimonda for this year and avert the possibility of lawsuits against Infineon which might ensue if Qimonda went bust.
Raising €450m will be difficult with the Infineon share price currently at around €1.
However if the share offering succeeds in raising €450m it will put Infineon in a better position for re-negotiating the payment of its €1bn bond repayment.
Sometime, if history is any judge, supply and demand will balance in the DRAM market, DRAM prices will come back up, and then Qimonda will be flooded with cash.
The only question is: When?
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