Infineon, the world’s largest manufacturer of automotive chips, is feeling the pinch from sluggish demand for electric vehicles. In response, the company aims to save a substantial triple-digit million amount annually—a strategy that might lead to job cuts.

On Tuesday, while presenting its quarterly results, the DAX-listed chip giant revised its forecast downwards again and unveiled a cost-saving initiative. CEO Jochen Hanebeck noted, “Many end markets are weak due to economic conditions, and the reduction of semiconductor inventories at customers and distributors is ongoing.”

Infineon plans to counter these challenges by saving a significant triple-digit million amount each year. The efficiency program, named “Step up,” is expected to show its first effects in the upcoming fiscal year. The planned measures include optimizations in manufacturing, portfolio management, pricing, and operating costs.

The stock market reacted positively to the announcement, with Infineon’s stock price temporarily climbing about six percent to 34 euros, although it remains slightly lower than at the start of the year.

Industry sources indicated that this is not a workforce reduction program. “Infineon is not taking a broad-brush approach,” one source commented. While there might be impacts on jobs in certain areas, the company still plans to hire 1000 new employees as part of the expansion of its Dresden plant.

“Overall, the workforce is expected to continue growing over the next few years,” the sources added. The company itself has not yet released details, but employees were scheduled to be internally briefed about the situation on Tuesday.

In the second quarter, Infineon’s revenue saw a slight decline to 3.6 billion euros compared to the previous quarter. The downturn was particularly noticeable in the Green Industrial Power (GIP) and Power & Sensor Systems (PSS) segments, while the automotive business remained stable. The segment result decreased by 15 percent to 707 million euros, equating to a margin of 19.5 percent.

Already in February, Infineon had lowered its plans for growth. For the current fiscal year ending in September, the company now expects revenue of about 15.1 billion euros, down 900 million euros from forecasts made just a quarter ago. The segment result margin is also anticipated to be around 20 percent, lower than previously expected three months ago.