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(Bloomberg) — Infineon Technologies AG Chief Executive Officer Jochen Hanebeck said that “full-scale recovery is not yet in sight” after the hoped-for resurgence in the electric vehicle market was delayed.
Sales fell 9.5% to €3.7 billion ($4 billion) in the quarter from the same period a year ago, the company said in a statement on Monday. That compared to the average €3.79 billion analyst forecast compiled by Bloomberg. Infineon’s segment result margin, a measure of profitability, was 19.8% for the quarter, in line with analysts’ estimates.
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Infineon is among the European chipmakers that specialize in making the type of chips used in cars and has grown especially dependent on automakers for their sales. The company, alongside peers STMicroelectronics NV and NXP Semiconductors NV, has suffered from the auto industry’s pullback from EVs, which in turn has been driven by higher interest rates, weaker-than-expected economic growth and a continued lack of charging stations.
Revenue in the fourth quarter will drop from a year earlier to about €4 billion, and Infineon anticipates segment result margin of about 20%, the company said. Analysts had anticipated revenue of €3.94 billion and segment result margin of about 22%.
“I’m very confident on the structural growth drivers, but on the cycle in all the different markets the visibility at this point in time is low,” Hanebeck said in an earnings call. “That’s why we are cautious.”
What Bloomberg Intelligence Says:
Infineon’s €100 million fiscal 2024 revenue guidance cut to €15 billion was less than analysts expected but may still find consensus’ 12% fiscal 2025 revenue growth challenging, we believe. Revenue in 3Q missed analyst expectations and Chinese electric-vehicles sales, which have held up relatively well on subsidies and discounts, could be unsustainable with rising car inventory.
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— Ken Hui, BI technology analyst
Sales from the German chipmaker’s automotive business, its largest, were €2.11 billion in the third quarter. That compared to €2.13 billion a year earlier, but was a sequential improvement from last quarter because of an increase in “software defined” vehicles, the company said. These cars use Infineon’s chips to help run systems that connect sensors and computers inside vehicles.
“China sees healthy consumer demand, which helps us, particularly given our number one automotive market position there,” Hanebeck said in the call.
The company expects its Connected Secure Systems business, which includes components that connect and control IoT devices, and its Power & Sensor Systems unit, which focuses on energy efficiency, to outperform the group. CSS is already seeing a glut of inventory coming down, while the surge in demand for AI systems is driving growth in PSS, said Hanebeck.
In May, Infineon announced a “structural improvement” program called Step Up, focused on improving manufacturing productivity and operating costs. As part of the program, Infineon has closed two small manufacturing sites in Asia and plans to cut jobs.
Chief Financial Officer Sven Schneider said the program would take a while to kick in. “I would consider it a more back-loaded exercise,” he said in the call, confirming that it would deliver “high triple-digit million euro margin improvement” in the first half of 2027.
Infineon shares were down 3.5% at 11:58 a.m. in Frankfurt trading, after earlier falling as much as 5.9%. The stock had fallen 24% this year.
(Updates with CEO comments and additional context throughout. A previous version corrected the quarterly sales decline percentage)
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