Infineon Technologies ( IFX) swung to a profit in its fiscal first quarter, as strong sales in its recently divested memory business helped offset challenges in its wireless business.

The German chipmaker on Monday reported revenue of 2.13 billion euros, or $2.75 billion, in its fiscal first quarter, compared with 1.67 billion euros a year ago.

Excluding sales from Qimonda ( QI), Infineon's former memory-chip business, Infineon posted sales of 958 million euros.

Infineon's net income was 120 million euros, or 0.15 euros a share, vs. a net loss a year ago of 183 million euros.

The company spun off Qimonda last year to exit the volatile memory business and focus on making chips for the automotive, industrial and communications business. The company still has an 85% stake in Qimonda.

The new plan hit a speed bump in September when cell phone maker BenQ, an important Infineon customer, went bankrupt, prompting Infineon to lay off 400 workers.

In the first quarter, Infineon's communications business saw sales plummet 21% sequentially as a result of the BenQ bankruptcy. The communications group lost 57 million euros in earnings before interest and taxes.

Infineon's automotive and industrial business saw sales slip 4% sequentially, due to what Infineon said were seasonal effects and weak U.S. car production.

Last week, Qimonda reported that its first-quarter revenue surged about 73% year over year, thanks to robust demand for DRAM memory in consumer and communications applications.

Infineon CEO Wolfgang Ziebart said Infineon's first-quarter results came out better than expected in a "challenging" operating environment.

"In a mixed market environment, we should return to revenue growth in automotive, industrial and multimarket in the current quarter and see strong design-win momentum in communication solutions, in particular the baseband business," Ziebart said.

Infineon projected that sales and earnings before income and taxes, excluding Qimonda, in the current quarter would remain "at least" flat sequentially.

The company said it would take charges related to the BenQ insolvency in the current quarter, rather that in the first quarter as it initially expected.

The charges will be significantly lower than the 30 million euros originally anticipated.

Shares of Infineon were up 1.1%, or 16 cents, at $14.55.

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