Munich Chip Company Infineon Records Better Business Prospects Than Expected, Stock Price Soars
Infineon is less affected by the semiconductor market slowdown than feared, and a potential crash in the new fiscal year is not in sight. This can be evidenced by the revenue growth of 15 percent in the past fiscal year, which reached a record value of 16.3 billion euros. Infineon shows strong development compared to other competitors and benefits from a robust portfolio and efficient leadership amid adversity.
Nevertheless, not everything is as good as in the past, because according to Infineon CEO Jochen Hanebeck, revenue in the new fiscal year will only increase by four percent to around 17 billion euros. Hanebeck explained that the company is operating in a challenging environment, as it contributes to both the upward trend of renewable energies, electromobility, and the automotive industry, as well as facing a low demand in consumer electronics and communication applications.
The new investment forecast states that the operating margin will decrease by three percentage points compared to the previous year, reaching 24 percent. The success of the corporation now depends even more on the automotive business, as it accounted for 52 percent of the revenue in the last quarter, compared to 47 percent the previous year. The automotive division now contributes 60 percent to the operating profit, compared to less than half the previous year. This is favored by the increasing demand for electric vehicles and assistance systems in the automotive market, which leads to more semiconductors being installed in vehicles.
Infineon also has automotive orders on its books worth more than twice the annual revenue. However, apart from the growth in the automotive business, the company is not as successful in general. This, however, is not unique, as similar figures are also recorded by major competitors such as NXP and ST Microelectronics. While NXP reported a revenue standstill in the last quarter and a slight increase in profit, ST Microelectronics reported a revenue growth of over two percent, but profit decreased by almost one percent. ST Microelectronics CEO Jean-Marc Chery also expects a 3 percent decline in revenue for the current quarter compared to the previous year.
Despite overall weaker growth, Infineon shareholders can look forward to an increase in the dividend by three cents to 35 cents per share.
