Infineon optimistic despite a poor year ahead

November 13, 2019 //By Christoph Hammerschmidt
Infineon optimistic despite economic headwind
Infineon achieved its targets in the 2019 financial year just ended and CEO Reinhard Ploss remains optimistic for the near future with growth of 5 percent in a declining market in 2020.

For the entire fiscal year, Infineon achieved sales of 8.029 billion euros, an increase of 6 percent over the previous year. Given the weakness of the automotive market, which accounts for approximately half of Infineon's revenues, Infineon CEO Reinhard Ploss said the year was challenging. Demand focused on power semiconductors and sensors for consumer devices. "We are clearly feeling the effects of weak global demand for automobiles and do not expect any improvement for the time being," said Ploss. A recovery will not occur until the second half of the next fiscal year, he said. Power devices was one of the key growth areas.

In the past fiscal year, sales and operating profit were slightly better than planned. The return on sales (segment result margin) was 16.4 percent.  The company had recently set itself a sales target of 8 billion euros and a margin of 16 percent.

For the upcoming first quarter of fiscal year 2020, the company initially expects a slight decline in revenues, as the first quarter is traditionally somewhat weak at Infineon. However, in the medium term (and beyond the coming fiscal year), Infineon should benefit disproportionately from the switchover in mobility towards electric vehicles. In a recent interview with eennews Europe, the Senior Vice President of Infineon's Automotive Division, Hans Adlkofer, detailed the impact of the switchover to electric vehicles on the demand for semiconductors in cars. According to Adlkofer’s calculation, a conventional car currently contains an average of $417 chips, while a plug-in hybrid (PHEV) contains $780 worth of semiconductors.

A risk factor for Infineon could be the planned takeover of competitor Cypress Semiconductor. For this acquisition, the chip manufacturer from Munich has carried out an extra capital increase of 10 percent. This takeover is not yet home and dry - or at least not yet completely, because the responsible US authorities have not yet given the green light. However, the European antitrust authorities have already given


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