Infineon CEO Warns Recovery From EV Slump Is ‘Not Yet in Sight’

(Bloomberg) -- Infineon Technologies AG Chief Executive Officer Jochen Hanebeck warned that a full-scale recovery from a slump in electric-vehicle demand is “not yet in sight” and reported disappointing third-quarter sales, dashing investors’ hopes of a long-awaited market rebound. 

The German chipmaker’s revenue dropped 9.5% to €3.7 billion ($4 billion) in the quarter from the same period a year ago, falling short of the €3.79 billion that analysts had been expecting. The company also projected full-year sales that slightly missed estimates and laid out plans to cut 1,400 jobs.

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, have been reeling from the auto industry’s pullback from EVs — a retreat driven in turn by higher interest rates, weaker-than-expected economic growth and a persistent lack of charging stations.

“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 a call with investors. “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.

— Ken Hui, BI technology analyst

Infineon shares were down 2.3% at 11:27 a.m. London time, after earlier declining as much as 5.9%. The stock had fallen more than 20% this year through Friday’s close.    

Sales from the German chipmaker’s automotive business, its largest, were €2.11 billion in the third quarter. That compared with €2.13 billion a year earlier but was a sequential improvement from the last quarter, a gain that the company attributed to “software defined” vehicles. 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 division that connects and and controls IoT devices and its power and sensor unit that’s focused on energy efficiency to outperform the group. The first unit is already seeing a glut of inventory come down, while the surge in demand for AI systems is driving growth in the second, Hanebeck said.

In May, Infineon announced a “structural improvement” program focused on bolstering manufacturing productivity. 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, saying it would deliver “high triple-digit million euro margin improvement” in the first half of 2027.

(Adds plans to cut jobs in second paragraph. A previous version corrected the quarterly sales decline percentage)

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