Infineon ramps up investment by €500M as AI data centers fuel unprecedented chip demand growth

Infineon Forecasts Growing Revenue From AI Data Center Demand

Infineon Technologies AG said it would ramp up spending on its technology for data centers to meet growing demand for artificial intelligence solutions. The German chipmaker, which makes semiconductors used to power data centers, said it will raise investment to about €2.7 billion ($3.2 billion) in the current fiscal year, up from a previously projected €2.2 billion, according to a statement on Wednesday. The company expects data center-related revenue to rise from around €1.5 billion in fiscal 2026 -- roughly 10% of sales -- to €2.5 billion in 2027. "This would equal a tenfold increase in our AI sales within just three years," Chief Executive Officer Jochen Hanebeck said in a media call on Wednesday. Infineon shares rose as much as 4.2% in Frankfurt at market open. Rising AI data center demand is helping Infineon navigate a weak automotive business, its largest segment representing roughly half of total sales. Investors have been awaiting a recovery in these more mature chips after several quarters of declining revenue, driven by a prolonged demand slump as customers worked through inventories built up during pandemic-era shortages. Infineon's additional spending will focus on completing and ramping up manufacturing, including at its Dresden site, the company said in the statement. In a further move to diversify its business, Infineon said late Tuesday that it had agreed to buyBloomberg Terminal the automotive, industrial and medical sensor business of AMS Osram for $673 million in cash. The sensors detect and convert signals such as movement and sound into data for vehicles, health trackers and robots. The deal will be funded with additional debt and is expected to generate about €230 million in sales this calendar year. "The cyclical recovery is evident in Infineon's results, but as with analog peers, it is slow and varied by end market," Citi analysts including Andrew Gardiner wrote in a reaction to earnings. "We had not expected Infineon to raise FY26 guidance only one quarter in and with mixed end markets, but the increased visibility into AI growth is a distinct positive." Revenue in the current period will be around €3.8 billion, the company said. That is in line with the average analyst estimate of €3.8 billion, according to data compiled by Bloomberg. Infineon expects adjusted operating margin to be in the mid-to-high-teens percentage range for the quarter, comparing to the analyst estimate of 17.5%. The company reiterated the outlook it gave November for "moderate revenue growth" in the fiscal year ending September 2026. Infineon peers STMicroelectronics NV and NXP Semiconductors NV reported earnings in the last week that disappointed investors even though their outlooks signaled recovery. STMicro shares fellBloomberg Terminal after the analog chipmaker's report showed uneven recovery across different end markets and CEO Jean-Marc Chery said the auto market was not yet "stable." NXP investors were worried by slightly slower growth in the automotive market than anticipated. Infineon reported first-quarter revenue of €3.66 billion, slightly beating analysts estimates of €3.62 billion, according to data compiled by Bloomberg. Adjusted operating margin came in at 17.9%, beating analysts' expectations of 16.8%. The automotive business also came in slightly ahead of expectations at €1.8 billion. Infineon Chief Financial Officer Sven Schneider said the technology serving AI data centers has "tremendous potential." "It's going up quarter after quarter," Schneider said in an interview on Bloomberg Television. "It's for us the biggest growth driver in the history of the company." Schneider contrasted it with Infineon's chips for automotive and industrial customers, which have "gone beyond the trough" without a recovery in demand. "That's where we see the uncertainties."

Infineon boosts investment target by 500 mln euros to meet data centre demand

BERLIN, Feb 4 (Reuters) - Germany's Infineon (IFXGn.DE), opens new tab, whose chips power AI data centres, said it plans to invest an extra 500 million euros ($591.65 million) in manufacturing capacity this fiscal year as it expects revenue from that business to grow by two-thirds in 2027. The company on Wednesday increased its planned investments for its 2026 fiscal year that began on October 1 to 2.7 billion euros, with a focus mainly on chips that power the data centres. As a result, it said it expects revenue from its AI business to hit 1.5 billion euros in the current year and reach 2.5 billion euros in the next one. Shares were up 2.6% in early trade after the results. "The very dynamic demand for AI, against an otherwise subdued market backdrop, is providing strong tailwinds to Infineon," CEO Jochen Hanebeck said. "To serve our customers in the best possible way, we are aligning our manufacturing capacity to meet further rising demand and are bringing forward our investments in this area," he added. Infineon also reported group first quarter revenue of 3.66 billion euros, slightly above the 3.62 billion euros expected in a poll of analysts by Vara Research published on January 27. Its segment result margin - Infineon's preferred measure of operating profitability - also beat expectations by reaching 17.9% for the fiscal first quarter ending in December. Revenue for Infineon's power and sensor systems segment was down 3%, at 1.17 billion euros, compared with the previous quarter, but is expected to grow at a much faster rate than the group average over the year on data centre demand, it said. ($1 = 0.8451 euros) Reporting by Hakan Ersan and Miranda Murray, editing by Linda Pasquini and Andrew Heavens Our Standards: The Thomson Reuters Trust Principles., opens new tab

Infineon boosts investment to meet demand from AI data centres

Infineon is aiming for a chip revenue target of 1.5 billion euros for its current 2026 fiscal year that began on October 1. Germany's Infineon, whose chips are used to power AI data centres, expects revenue from that business ⁠to leap nearly two-thirds to 2.5 billion euros ($2.96 billion) in its 2027 fiscal year, as it raises planned investments to meet demand. Infineon is aiming for a chip revenue target of 1.5 billion euros for its current 2026 fiscal year that began on October 1. To meet the anticipated demand, the company increased its planned investments for its 2026 fiscal year by roughly 500 million euros, to 2.7 billion euros, to expand the manufacturing capacity for data centre power supplies. "To serve our customers in the best possible way, we are aligning our manufacturing capacity to meet further rising demand and are bringing forward our investments in this area," said CEO Jochen Hanebeck on Wednesday. Infineon also reported group first quarter revenue of 3.66 billion euros, slightly above the 3.62 billion euros expected in a poll of analysts by Vara Research published ⁠on January 27. Revenue ⁠for its power and sensor systems segment was down 3%, at 1.17 billion euros, compared with the previous quarter, but is expected to grow at a much faster rate than the group average over the course of the year on data centre demand, Infineon said.

Infineon Raises Investments to Meet Unrelenting AI Chip Demand -- 2nd Update

Infineon Technologies said it would increase investments in the fiscal year through September to boost manufacturing as semiconductor demand for artificial intelligence keeps booming. The German chip maker said it would now aim to invest around 2.7 billion euros ($3.19 billion) in fiscal 2026, above a previous target of 2.2 billion euros. A significant portion of investments are set to go toward a facility in the German city of Dresden that is expected to open in the summer as well as other sites to expand production capacity for semiconductors powering data centers and other AI infrastructure. The move shows that Infineon is struggling to keep up with demand to power the technology even as some investors worry that high spending commitments are creating an AI bubble. "At present, the focus is on power-supply solutions for AI data centers; in the coming years, the expansion of grid infrastructure will be added," Chief Executive Jochen Hanebeck said. "To serve our customers in the best possible way, we are aligning our manufacturing capacity to meet further rising demand and are bringing forward our investments in this area." Infineon in November lifted its AI revenue target for fiscal 2026 to about 1.5 billion euros from 1 billion euros, betting that clients would place more orders for sophisticated AI semiconductors and subsequently boost sales. The company went a step further on Wednesday, saying that AI revenue should grow to roughly 2.5 billion euros in fiscal 2027. While the company remains sanguine about AI, Infineon is still grappling with sluggish demand for chips from carmakers, a key market since its automotive business accounts for the lion's share of sales. Carmakers amassed chips at the height of the pandemic and have been digesting those supplies in recent years, weighing on demand for new orders. Despite progress in the inventory correction, the auto industry is being cautious as a slow electric-vehicle rollout and fierce competition from Chinese rivals forced some brands to review their lineups and scale back production. Last week, Infineon's rival STMicroelectronics--which counts Apple and Elon Musk's Tesla among its clients--said its business catering to automotive clients fared below expectations in the last three months of 2025. Infineon on Tuesday struck an agreement with Austria-based electronics company Ams-Osram to buy its non-optical analog and mixed-signal sensor operations for 570 million euros, a deal aimed at strengthening Infineon's offering for the automotive, industrial and medical markets. Infineon posted revenue of 3.66 billion euros for the three months through December, up 7% on year. Analysts had forecast quarterly revenue of 3.62 billion euros, according to a Vara Research consensus. Net profit increased to 256 million euros from 246 million euros a year earlier. Its segment result--a closely watched profitability metric--grew to 655 million euros from 573 million euros, generating a 17.9% segment result margin. Analysts had forecast net profit of 290 million euros, a segment result of 607 million euros and a 16.8% segment-result margin, according to the consensus. The company said revenue in the quarter through March should come in at roughly 3.8 billion euros, up from 3.59 billion euros a year earlier. Infineon's segment result margin is expected in a mid-to-high-teens percentage range compared with 16.7% the year-prior quarter. For the year through September, Infineon said it continued to expect revenue to increase moderately from the 14.66 billion euros it reported for fiscal 2025, with a segment result margin in a high-teens percentage range.