Infineon Raises Profit Outlook Amid Semiconductor Market Recovery and AI Demand

Infineon lifts profit outlook as semiconductor market revives

BERLIN, Aug 5 (Reuters) - German chipmaker Infineon (IFXGn.DE), opens new tab slightly raised its full-year profit guidance on Tuesday after reporting stronger-than-expected quarterly earnings, and said global semiconductor markets had begun to recover despite lingering tariff concerns. It said it was well-placed to take advantage of the increase in semiconductor demand, including from the car sector and AI data centres. Shares fluctuated after the results, rising by 4.2% at 1049 GMT after an early fall of 1.9%. Infineon's segment result margin - its preferred measure of operating profitability - climbed to 18% for the fiscal third quarter ending in June, beating analysts' expectations of 15.8%. The company credited the performance to a faster-than-anticipated rebound in its Green Industrial Power and Power & Sensor Systems divisions, driven by rising demand for energy-efficient technologies and power semiconductors used in data centres. "The semiconductor markets are slowly recovering from the prolonged downturn," said Infineon CEO Jochen Hanebeck in a conference call. Hanebeck reaffirmed expectations that sales from Infineon's chip business for AI centres would double to around 600 million euros ($692 million) for the fiscal year. In response, Infineon raised its full-year segment result margin guidance to a high-teens percentage, up from the mid-teens range projected earlier, partly due to lower investments. The company revised its capital expenditure forecast for the fiscal year to 2.2 billion euros, down slightly from the previous estimate of 2.3 billion euros. Fourth-quarter revenue, adjusted for currency effects, is expected to rise to 3.9 billion euros, up from 3.7 billion euros in the third quarter. Infineon clarified its previous full-year sales forecast from May of a slight decline from the previous year's 14.96 billion euros and now predicts around 14.6 billion euros. Although the overall revenue trajectory fell short of some expectations, analysts were upbeat. "With tariff uncertainty subsiding, we remain positive on the cyclical and structural growth outlook, and further margin recovery," Janardan Menon of Jefferies said. ($1 = 0.8671 euros) Reporting by Miranda Murray and Hakan Ersen, Editing by Ludwig Burger Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Technology Miranda Murray Thomson Reuters Speed editor on the Berlin hub who provides general coverage on everything from politics to energy in Germany, Austria and Switzerland, with the goal of getting the news out as quickly as possible. Miranda previously worked at the German press agency dpa and Chicago Tribune

Infineon Lifts Guidance as Semiconductor Demand Picks Up -- Update

Infineon Technologies raised its margin forecast for the fiscal year as demand for semiconductors powering vehicles, energy infrastructure and artificial-intelligence data centers is on the rise. The German chip maker said it expects revenue of around 14.60 billion euros ($16.90 billion) in the fiscal year to the end of September compared with nearly 14.96 billion euros it reported a year earlier. The company previously warned that sales would be slightly lower, but hadn't provided a figure. Meanwhile, Infineon's segment result margin--a key profitability measure--is expected in a high-teens percentage range compared with prior guidance in a mid-teens percentage range. The changes come just three months after the company had cut its sales and margin guidance for the fiscal year, saying it was removing 10% of revenue it previously expected in the final quarter because of the estimated impact of tariffs. Last month, President Trump came to an agreement with the European Union under which the U.S. will set a 15% tariff for the vast majority of EU exports. The European Commission, the bloc's executive arm, said the 15% ceiling would apply to semiconductors even after Washington completes an investigation under Section 232 of the Trade Expansion Act of 1962 that could result in specific tariffs for the industry. Still, the company remains vulnerable to tariffs the U.S. might levy on other nations given the interconnectedness of supply chains. Decades of predictable trade rules have made it easy for chip makers to design their products in Europe and send them for fabrication to hubs in Asia. Infineon opened a new plant in Malaysia last year. "We and our customers are continuing to navigate our way through an uncertain macroeconomic and geopolitical situation," Chief Executive Jochen Hanebeck said. Aside from tariffs, Infineon and other chip makers are recovering after months of uneven demand: semiconductors to power AI data centers have been highly popular in recent years, but orders for legacy chips found in cars and industrial equipment have been more subdued. Carmakers and manufacturers of industrial machinery had cut spending since they stockpiled the semiconductors they needed years ago, causing an inventory glut. Infineon said inventory in its target markets had improved a lot lately. Infineon posted 3.70 billion euros in sales in the three months to the end of June, flat on year. Net profit slipped to 305 million euros from 403 million euros a year earlier. Infineon's segment result declined to 668 million euros from 734 million euros, generating an 18% margin. Analysts had forecast quarterly sales of nearly 3.71 billion euros, a net profit of 324 million euros, a segment result of 585 million euros and a 15.8% margin, according to the Vara Research consensus. For the current quarter to the end of September, Infineon said it expects revenue of around 3.9 billion euros and a segment result margin in the high-teens percentage range.