Sun. Nov 28th, 2021

Europe’s largest chipmaker Infineon nearly doubled its profits in the three months to end-September, as the German group benefited from semiconductor noise amid a global shortage.

The Munich-based company, which relies on the automotive industry for more than 40 percent of its revenue, said profit for the period was € 464m, compared to € 245m in the previous quarter.

“Our corporate strategy is fully focused on the key trends of electrification and digitization,” said CEO Reinhard Ploss. “We are investing significantly more to seize opportunities to grow.”

In September, Infineon opened Europe’s latest semiconductor plant in Villach, Austria, after advances in automation reduced operating costs on the continent compared to Asia.

In addition to the € 1.6 billion he has spent on the site, Infineon plans to invest € 2.4 billion over the next 12 months to expand its facilities.

The company, which provides semiconductors for everything from car safety systems to information entertainment devices, is one of a handful of manufacturers that manufacture most of its chips themselves, rather than outsourcing to companies like Taiwan’s TSMC.

But Infineon said it would slowly increase the amount of outsourcing it did from 30 percent to 40 percent over the next four years “where we see no or little differentiation to optimize our capital efficiency”.

For the full 12 months ending in September, Infineon generated a profit of € 1.17 billion, from € 368 million in the previous year hit by pandemic, and € 870 million in the 2019 financial year.

However, the company said it expects revenue to rise by a more modest 14 percent in the 2022 financial year, to € 12.7 billion.

Analysts have warned that the industry may experience a one-time swell in demand as carmakers overbook to avoid further shortages.

“A certain amount of double order must be accepted,” Ploss said Wednesday. He told the Financial Times last month that the volume of orders from the automotive industry was enough to support the production of up to 120 million vehicles per year, when the sector expects to exceed barely 80 million.

Ploss also told analysts on Wednesday that he expects bottlenecks in the offer to last at least until 2022.

The CEO has previously expressed skepticism that the reorder of production to Europe will solve the supply chain problems for companies on the mainland, as chip manufacturers’ biggest customers will remain American and Asian manufacturers of consumer devices.

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