The company gave no reasons for the shock decision, which was effective immediately, and company spokesman Ralph Heinrich refused to comment further.

Infineon said in a statement that supervisory board chairman Max Dietrich Kley, 64, would act as chief executive in the interim, but for the maximum of one year.

Mr Kley was formerly chief financial officer of chemicals giant BASF.

Sources said Mr Schumacher had been forced out on Thursday after a hastily called supervisory board meeting criticised him over his strategy and management style.

Some of the controversial measures he implemented such as the outsourcing of some of the company's businesses came under criticism and the powerful union IG Metall indicated that supervisory board members had criticised his management style as being too authoritarian.

According to a source close to the situation, Mr Schumacher, whose contract would have run until 2007, had been forced to resign after recent clashes with chief financial officer Peter Fischl and chief operating officer Andreas von Zitzewitz.

Investors were unnerved by the shock decision. Infineon shares fell more than 3 per cent in the Frankfurt stock exchange, before closing 1.17 per cent lower at 11.02 euros (US$13.36).