Infineon Monitoring Chip Supply Chain Risks, Raises Outlook

(Bloomberg) -- German semiconductor manufacturer Infineon Technologies AG forecast 2021 full-year revenues of around 10.8 billion euros ($13 billion), topping estimates and above the previous outlook of 10.5 billion euros.

• Infineon's robust earnings comes after Qualcomm Inc., the world's largest smartphone chipmaker, warned it is struggling to meet demand, signaling that a global semiconductor shortage is spreading.
• “Semiconductors are needed more than ever,” said Reinhard Ploss, CEO of Infineon. “We are monitoring ongoing risks closely.”

Key Insights

• Shares fluctuated, and were little changed in early afternoon trading in Frankfurt on Thursday.
• The company will move up the start of production at its new chip plant in Villach to the last quarter of fiscal year 2021. Infineon could expand production in Dresden, executives told reporters on a conference call.
• Demand is outstripping supply in several areas, including microcontrollers and the Internet of things, executives said on a conference call with analysts.
• Infineon said first-quarter revenues were particularly strong in the automotive segment, and that it expects second-quarter revenues between 2.5 billion euros to 2.8 billion euros.
• “In view of dynamic ordering momentum and manufacturing plants running at good utilization rates in the majority of product areas, we are making a slight upward adjustment to our outlook for the full year,” Ploss added.
• Last year Infineon shares had their best performance in a decade, climbing about 55% in 2020 as the company was bolstered by a recovery in the auto sector as demand recovered from the pandemic.
• Analysts expect Infineon to continue benefiting from its strong presence in automotive chips as electric vehicles gain market share, and manufacturers roll out more hybrid and electric models
• Other trends seen boosting Infineon include the shift to work-from-home, gaming and 5G, according to Goldman Sachs Group Inc. analyst Alexander Duval.
• The firm reported first-quarter total segment profit of 489 million euros, versus analysts' estimate of 416.8 million euros.

Get More

• Get the full results here.
• Bloomberg Businessweek story on how a shortage in chips during the pandemic disrupted the auto industry.

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