Infineon Technologies grew FQ4 revenue by 21 percent due to global auto market recovery

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Infineon Technologies grew its fiscal fourth-quarter revenue by 21 percent thanks to the global auto industry’s recovery. The German chipmaker’s vehicle segment saw significant sequential and annual gains after enduring a coronavirus pandemic related downturn in the fiscal third quarter.

The corporation believes the revival of the worldwide personal transport sector will bolster its income in the fiscal first quarter of 2021 and beyond.

Infineon’s FQ4 Triumph

In the three months ending September 30, Infineon took in €2.49 billion ($2.93 billion) in revenue, a marked improvement over the €2.06 billion ($2.43 billion) it made in FQ4 2019. The firm also bettered its intake on a sequential basis by 15 percent.

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For the full fiscal year 2020, the company made €8.567 billion ($10.11 billion), up 7 percent year-over-year.

Infineon’s income rebound was a by-product of the outstanding performance of its automotive division. The segment, responsible for 42 percent of the chipmaker’s sales, earned €1.05 billion ($1.24 billion) last quarter. That haul represents an 18 percent increase on an annual basis and a 29 percent spike quarter-over-quarter.

CEO Dr. Reinhard Ploss noted the vehicle market experienced a better-than-expected recovery from its COVID-19 related plunge this summer.

The corporation experienced a 19 percent yearly spike in its power & sensor systems unit sales, which totaled €759 million ($894 million). Its connected secure system revenue rose 101.2 percent from the same time frame in 2019. However, the firm’s industrial power control segment income declined by 5 percent due to softness in the factory automation market.

Infineon’s FQ4 income also enjoyed a boost from its absorption of Cypress Semiconductor, which concluded in April. Dr. Ploss said the subsidiary provided its parent organization with one-fifth of its total intake for the September period in an earnings call.

Vehicle Demand and Electrification to Drive Growth

The Neubiberg-based semiconductor company anticipates €2.4 billion ($2.83 billion) to €2.7 billion ($3.19 billion) in sales for FQ1 2021. Depending on its performance, the firm will grow its business by 25.2 to 40.9 percent year-over-year in the current period.

Infineon estimates its 2021 fiscal year income will be around €10.5 billion ($12.39 billion), a 22.56 percent annual improvement.

Despite forecasting double-digit expansion, the chipmaker described its outlook as “cautiously optimistic.” Having experienced the disruptive effects of the first wave of the coronavirus outbreak, it worries its recent resurgence could impact its business. The company is also concerned about ongoing trade tensions between the United States and China affecting its profitability.

That said, Infineon found the fairly rapid recovery of the American and European auto markets to be encouraging. It also views the French and German governments’ offering sizable electric vehicle purchase incentives as a positive development. Since battery-powered transports have higher chip content than their fossil fuel-driven counterparts, the electrification trend works in Infineon’s favor.

Dr. Ploss opined that work-from-home transitions prompted by COVID-19 would result in a permanent uptick in online services usage. The chief executive believes that new market preference will lead to more sales to the firm’s data center clients.

Like many chipmakers, Infineon experienced massive disruption and some business contraction due to the pandemic. But the global health crisis’s impact on various markets has cultivated its growth. But opportunity alone does not make businesses successful; companies need products their end-markets want. Infineon’s diverse catalog and expanding target markets should enable it to realize its near and long-term projections.

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