Chipmaker Infineon plans 50% increase in investment


By Christina Amann

BERLIN, Reuters

Infineon has said it will invest around 2.4 billion euros ($ 2.8 billion) in 2022, up from around 1.6 billion euros this year.

“We are initially investing in existing factories,” CFO Sven Schneider told Reuters. He said Infineon was considering the need to add more capacity, but added that it was still too early to decide on that.

The leading supplier of chips to the automotive industry predicts revenue will grow by a mid-teens percentage next year, with a segment profit margin – a measure of operational profitability – of around 20%, compared to a target of 18% in 2021.

“Most of the sales growth will come from capacity building, but also a decent part from higher prices, some of which we will pass on to customers,” said Schneider.

Infineon stock was up 3% at 1:17 p.m. GMT.

The company blamed the lack of investment in new capacity from its manufacturing partners for tightening semiconductor markets as demand rebounded from coronavirus lockdowns, disrupting chip supply, by particularly in the automotive industry.

Chipmakers under contract have mostly invested in the production of higher margin processors used in devices like smartphones, leaving existing factories unable to meet demand for older chips used in cars.

Infineon opened a € 1.6 billion plant in Austria last month, boosting its ability to supply power chips for cars, data centers and renewables.

The Munich-based company may decide to build another factory soon, assuming the rapid adoption of electric vehicles continues to pick up capacity at its existing factories, Stifel analyst Juergen Wagner predicted.

Schneider said he expected the chip shortage to last until 2022, praising European efforts to increase semiconductor production capacity.

Infineon has confirmed its 2021 revenue forecast of 11 billion euros.

The company itself faced problems meeting delivery commitments after a winter storm destroyed a factory in the United States and closures disrupted operations in Malaysia.

($ 1 = € 0.8622)

(Written by Riham Alkousaa and Emma Thomasson; Editing by Jason Neely and Mark Potter)

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