Over the last couple of years Infineon was in the news with bad news fairly often. It was involved in patent and licensing tussles with Rambus, price-fixing, and also with suspected corruption in motor sport sponsorship leading to the sacking of a CEO.

Executives were jailed too - but this is beginning to seem par for the course at Siemens what with the current corruption scandal in its fixed line telecommunications business. Bribery, slush funds, jailed employees? Just another day in the Siemens business empire.

Anyway, instead of selling off Infineon Siemens decided to spin-off its memory business and retrench Infineon back to communications, automotive and industrial semiconductor products. So the memory business became Qimonda in May. There was an IPO in August and it's now the second-largest DRAM manufacturer in the world. Infineon itself is still making losses, losing 15 million euros in the 2006 financial year.

Infineon holds 86 percent of the shares in Qimonda. Excluding income from Qimonda its losses were even deeper. The Infineon business is slowly being turned around with, for example, production costs being lowered through complexity simplification. CEO Wolfgang Ziebart aims to complete his restructuring by the end of 2007.

Infineon revenues were badly damaged by the collapse of BenQ which was a big customer for its mobile chips. To an extent this particular Infineon woe was a self-inflicted, though unanticipated, wound by Siemens. It spun-off its mobile phone business into Korea-based BenQ which collapsed in September

Qimonda has good technical prowess and it could turn good whilst Infineon becomes moderately profitable and not the semi-conductor powerhouse Siemens originally hoped for. Qimonda results for its Q4 FY 2006 wree good. For example its earnings per share were 0.24 euros, a growth of over 300 percent compared to Q4 FY 2005.

One thing it wants to do is to stop memory production at its fabrication plant in Dresden. This plant has 5,500 hard-to-fire employees. Possibly Infineon will get stuck with it and its disposal problem.

Siemens is beginning to look like a fairly poor venture capitalist, but a better VC than operator of newer businesses. It is better at helping to fund spin-offs and joint-ventures than running the businesses itself. Of course it penalised itself by being loyal to Germany and building plants there. You need to be nimble and ruthless in semi-conductor fabrication, two qualities hard to apply in Germany.

It begins to look as if Siemens applied the nimbleness and ruthlessness it needed for business success in slush funds, phony contractors, price-fixing and the like in order to help it get around the restrictions of basing manufacturing plants and businesses in Germany.