Infineon Technologies recently published its fiscal first-quarter results and revealed it increased its revenue by 37 percent from last year. The company’s robust growth largely came from gains in its automotive segment, which improved by 40 percent.
The manufacturer offered second fiscal quarter and full-year forecasts indicate it will continue doing brisk business. However, it also noted its operations are feeling the impact of the global semiconductor shortage.
Infineon’s Strong FQ1 Performance
Last period, Infineon brought in €2.6 billion ($3.16 billion), a major upgrade on the €1.91 billion ($2.29 billion) it made in FQ1 2020. It also recorded a segment profit of €489 million ($587.8 million), topping market analysts’ estimate of €416.8 million ($501 million).
CEO Dr. Reinhard Ploss explained the corporation’s strong performance came about because of heavy demand for its products. The post-pandemic recovery of the firm’s end-markets bolstered its earnings in the quarter prior.
Infineon’s FQ1 sales were driven by its automotive segment, which brought in €1.15 billion ($1.38 billion), up 40 percent year-over-year. The company’s vehicle offerings sold well during the December period, which saw the global personal transport market pick up steam. Its income also got a boost from the car electrification trend as battery-powered vehicles have a higher chip content than gas-burning automobiles.
The manufacturer posted big annual gains in its power & sensors (PSS) and connected secure systems divisions (CSS), improving their intake by 35 and 105 percent, respectively. The corporation is still primarily an automobile electronics component vendor, but the expansion of its consumer electronics and Internet of Things (IoT) businesses speaks to its catalog’s strength.
High Expectations and Capacity Shortage Concerns
Infineon expects it will make €2.4 billion to €2.7 billion ($2.88 billion to $3.2 billion) in FQ2. It anticipates double-digit growth in its automotive segment and stable earnings from its other divisions on a per-segment basis. If it meets the midpoint of its quarterly forecast, it will improve its revenue by 20.3 percent year-over-year.
The corporation pegged its full-year 2021 sales at around €10.8 billion ($12.99 billion), up 26 percent from 2020.
Though Infineon feels positive about its prospects for 2021, its operations have been impacted by the worldwide semiconductor capacity crunch. The company acknowledged that demand for its microcontroller units (MCUs) and IoT components is greater than its supply. It also admitted that many of its products are on allocation due to a paucity of foundry space.
But the German company is taking steps to address the shortage’s impact on its business. It raised its 2021 capital expenditure target to €1.6 billion ($1.92 billion) to expand its capacity. It is expediting the start of manufacturing at its Villach factory to FQ4 2021, and it is considering building out the production line at its Dresden facility.
Infineon’s current projections may need to be adjusted down if the chip shortage gets worse. Its ability to meet demand for its semiconductors in the next six months will shape its annual revenue performance. However, the global movement toward electrification in the automotive industry, and the wider digitalization of society, will support its long-term growth.