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by Klaus Schachinger, Euro am Sonntag
E.t was the balance sheet for a special year that Infineon boss Reinhard Ploss presented at the virtual press conference. In the spring, the chip company had brought the billion dollar purchase of the American company Cypress Semiconductor into dry cloths. During the integration of their largest takeover of around nine billion dollars to date, the Bavarians clearly felt the effects of the pandemic. The group was hit especially in its automotive chip division, which brought in around 45 percent of the 8.6 billion euros in sales in the fiscal year to the end of September.
Recovery in the auto industry
Because of the burdens, the dividend is to be reduced to 22 from 27 cents per share. The bottom line is that Infineon is coping with the extraordinary challenges better than expected. The share price has already risen over the past few weeks and continued the trend after the balance sheet and outlook were presented. Group leader Ploss is “cautiously optimistic” for the new financial year. Some of the most important markets, especially the automotive industry, have recovered more strongly than expected in Europe since the summer. In China, the world’s largest auto market, the recovery is particularly strong, “almost V-shaped,” said Ploss. The trend towards alternative drives with electric and hybrid motors, which is now also strong in Europe, is positive. Infineon’s new technology with chips made of silicon carbide instead of silicon is particularly in demand here. These require far less energy.
Infineon benefits less from the number of cars sold than from the increasing proportion of semiconductors and sensors in the new models. This applies to the alternative drives as well as to driver assistance systems and the long-term goal of the autonomous driving mode.
The group is a winner of change in the automotive sector. With microcontrollers, programmable control units and memory modules from Cypress, the group has expanded its arsenal for the industry and, after taking over the group from Silicon Valley, is now the global number 1 chip supplier for the automotive industry. Infineon’s position in the growth markets of this segment made itself felt in the final quarter of the fiscal year with a jump in sales of 21 percent to 2.5 billion euros. The operating result increased at a similarly strong rate.
However, the broad-based group’s business is still sluggish elsewhere. Many markets are showing weaknesses, such as chips for factory automation, for train drives or the business with security chips for documents such as ID cards and passports. Here one is “still a long way from a recovery‘ ‘, warns the group leader.
Despite these uncertainties, Infineon expects 23 percent growth in 2021 with sales of 10.5 billion euros. The operating profit is expected to increase by 40 percent to 1.7 billion euros, also thanks to Cypress.
According to industry expert Ploss, the trade conflict between the USA and China could cause further turbulence in the global chip industry. Even under the newly elected US President Joe Biden, “significant changes” are not to be expected. Washington will continue to try to keep Beijing at a distance when it comes to chip technologies. Infineon’s high share of sales with China – around 30 percent – is not a higher risk for the DAX group from the company’s point of view.
Resistance: The car chip business is running, other areas should follow suit. Hurdle at 28 euros surmountable. Attractive.
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Image sources: 360b / Shutterstock.com, Axel Griesch for Finanz Verlag