INFINEON Technologies forecast revenue will decline in the 2025 fiscal year, missing analyst estimates, in a sign that demand from automotive customers in Europe and the US will remain depressed.
The German chipmaker expects revenue will “slightly decline” from the year that ended in September, when the company made 14.96 billion euros (S$21.3 billion), it said in a statement on Tuesday (Nov 12). The forecast compares to an average estimate of 15.75 billion euros among analysts surveyed by Bloomberg.
Infineon shares fell 0.9 per cent to 29.51 euros at 9.15 am in Frankfurt. They have fallen 22 per cent so far this year.
Infineon is the first major European chipmaker to give guidance for 2025, and sales to the car industry account for over half of the Munich-based company’s revenue. While demand for chips that power artificial intelligence is booming, other sectors of the semiconductor industry have stumbled, including chipmakers that depend on car manufacturers.
“Currently, there is hardly any growth momentum in our end markets except from AI, the cyclical recovery is being delayed,” chief executive officer Jochen Hanebeck said in the statement. “We are therefore preparing for a muted business trajectory in 2025.”
Revenue in the current quarter will be around 3.2 billion euros, with a segment result margin in the mid-teens, according to the statement. The average analyst estimate for the period is 3.8 billion euros.
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The market is unlikely to be surprised by Infineon expecting a slight decline in revenue for fiscal 2025 ending September, but the forecast for a small decrease in automotive sales appears better than the high-single-digit reduction anticipated,” Bloomberg Intelligence senior industry analyst Ken Hui said. “Guidance for 1Q sales representing a 15 per cent miss relative to the Bloomberg consensus implies the need for a strong recovery in the rest of year, which may be challenging amid industry headwinds.”
In the 2024 fiscal year, Infineon cut its revenue forecast three times as an expected recovery in the auto sector failed to materialise.
Revenue in the quarter ending in September fell 6 per cent from a year earlier to 3.92 billion euros, according to the statement. That missed the average analyst estimate of 3.98 billion euros. Segment result margin, a profitability metric, was 21.2 per cent compared to 25.2 per cent a year ago.
The company plans investments at around 2.5 billion euros in 2025. The focus will be on its German Dresden site, for smart power technologies for applications such as powering AI.
“We have cut our investments by 10 per cent compared to last year,” chief financial officer Sven Schneider said in an interview on Bloomberg TV. “We are focusing on the strategically relevant decisions, like our Dresden module four.”
Carmakers in Europe are struggling to compete with cheaper models from China, and the market for electric vehicles has also hurt peers STMicroelectronics and NXP Semiconductors. There is also an inventory glut of chips for the industry as demand remains weak.
At the same time, Beijing has ramped up its own semiconductor production, and the European Commission has warned that the continent’s chipmakers are at risk of losing market share for more mature types of semiconductors.
Last month, the European Union imposed higher tariffs on electric vehicles from China in escalating tensions that carmakers say could hurt their sales there. BLOOMBERG
