(Feb 4): Infineon Technologies AG said it will ramp up its investment in technology for artificial intelligence, working to diversify its business in a prolonged slump in auto and industrial chip demand.
The German chipmaker, which makes semiconductors used to power data centres, said it will raise investment to about €2.7 billion in the current fiscal year, up from a previously projected €2.2 billion, according to a statement on Wednesday.
The company expects data centre-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.
Rising AI data centre 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, amid weak demand from customers who had built up stockpiles during pandemic-era shortages.
AI demand is “going up quarter after quarter,” chief financial officer Sven 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.”
See also: Ford in talks with Geely to share European production capacity — reports
Infineon shares fell 2% to €40.24 at 10.56am in Frankfurt, erasing gains from market open.
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.
“The cyclical recovery is evident in Infineon’s results, but as with analogue 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 FY2026 guidance only one quarter in and with mixed end markets, but the increased visibility into AI growth is a distinct positive.”
See also: Nestle adds Deutsche Bank for water business stake sale — Bloomberg
In a further move to diversify its business, Infineon said late Tuesday that it had agreed to buy the automotive, industrial and medical sensor business of AMS Osram for
US$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.
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 signalled recovery. STMicro shares fell after the analogue 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.
Uploaded by Evelyn Chan
