Shares in German chip maker Infineon have jumped almost 4%, after the firm showed signs that a string of shattering losses could be coming to an end.

Infineon made a net loss of 108m euros in the first three months of the year, just one-third of the losses endured in the previous quarter.

Although the company is still some way off break-even, a 34% quarter-on-quarter jump in revenues boosted hopes that the chip market could be on the mend.

"We have seen growing demand in all of our business segments, especially for memory products," said Ulrich Schumacher, the company's president and chief executive.

"We are well prepared to further benefit from any sustained market recovery.�

The semiconductor industry has been suffering a profound slump over the past two years, battered by slumping demand among major consumers in the computer and mobile phone industry.

Cautious optimism

The company remained cautious, however, as to whether the wholesale recovery would happen soon.

The competitive environment remained tough, it warned, and prices for chips were low across most of the company's business divisions.

"The market outlook for the next six months still remains somewhat uncertain and will depend on the extent and sustainability of the recovery of the world economy, particularly in Europe and the United States," Infineon said in a statement.

The results confirmed the growing sense that the industry could be turning the corner.

Europe's number one chip firm, French STMicroelectronics, said on Monday it expected sales growth of 10% in the current quarter.

On the same day, two of the world's biggest producers of memory chips, US Micron and Korean Hynix, agreed a long-awaited partial merger.