Chip manufacturer Infineon announces the double boom
Dhe Infineon CEO Jochen Hanebeck has not been in office for a year, but is starting the new 2022/23 financial year with a bang: According to this, the chip manufacturer from Neubiberg near Munich wants a new billion-dollar plant in Dresden to build. The Dax group is so optimistic about its own prospects that Hanebeck has also raised its long-term goals.
The announcement was very well received on the stock exchange. The share price rose by up to 7 percent in the course of trading. No wonder: Because with the step stands Infineon not only in line with the major investments made by Intel in the new chip plants in Magdeburg and Ohio, and those made by TSMC and Samsung in the Far East and the United States; As one of the three major European manufacturers, it is now catching up with the Americans and Asians in the investment race and is also strengthening Dresden, Europe’s largest semiconductor location to date, with its EUR 5 billion investment.
increasing the prognosis
“Decarbonization and digitalization are causing structurally increasing demand for semiconductors,” said Hanebeck. Thanks to its strategic focus on industrial customers, Infineon will benefit disproportionately from this development. “This dynamic has continued to accelerate, so now is the right time to give us an even more ambitious target business model,” said the manager, who took over the top position in the group in the spring.
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Infineon supplies power semiconductors, primarily for the automotive industry and the associated electromobility. However, the components are also used in other growth areas such as mechanical engineering, in data centers and in systems for renewable energies. The Group expects that these areas will develop very quickly and dynamically and will ensure sustained strong growth far beyond the semiconductor industry.
Therefore, Infineon now anticipates sales growth of more than 10 percent instead of at least 9 percent previously. Above all, profitability should also improve. Infineon has set itself the goal of achieving the so-called segment result margin, i.e. the operating margin, on average in the future at a level of 25 percent – previously the group had assumed 19 percent. According to this, among other things, an increasing proportion of system solutions, a product mix with higher margins and cost-efficient production on silicon wafers, i.e. pizza-sized discs with a diameter of 300 millimeters, should ensure better results.
A new plant in Dresden, which Hanebeck also announced on Monday, should help with this. “With the planned investment in a new plant, we are consistently implementing our strategy and broadening the basis for our accelerated profitable growth course with foresight,” he said. They are happy “about the political support” for an investment in Dresden and rely on “appropriate funding under the European Chips Act,” he said. The planned investment volume is therefore 5 billion euros, the largest single investment that Infineon has ever made. For comparison: Just last September, the group opened a new plant in Villach, Austria, in which a total of around 1.6 billion euros were invested.
Chip Mecca Dresden
Infineon said that the new building in the chip mecca of Dresden was subject to appropriate funding. Chips and power semiconductors in 300 millimeter format are to be manufactured there. At full capacity, the group estimates the annual sales potential at the level of the investment made. Production could start in autumn 2026. Up to 1000 jobs would also be created.
In light of all the news, the financial numbers for the past fiscal year (ended September) almost went under. Sales increased by 29 percent to 14.2 billion euros, the segment result, i.e. the operating profit, even improved by 63 percent to 3.4 billion euros. Infineon thus exceeded analysts’ expectations.
Despite the war in Ukraine, tensions between China and the USA, the energy crisis and inflation, Hanebeck remains optimistic about the current financial year. You started well. In view of the general uncertainties surrounding the global crises, however, great vigilance is required in the coming quarters. “We are prepared to act quickly and flexibly if necessary,” said Hanebeck. The group expects a margin of 24 percent for 2023, and sales are expected to increase to EUR 15.5 billion – within a range of EUR 500 million in both directions.
