Infineon Slashes €1bn Amid Lowered Forecast

Infineon Technologies, a leading semiconductor manufacturer, has initiated a significant cost-cutting program in response to the anticipated prolonged weakness in several electronics markets. The company's latest initiative, dubbed 'Step Up,' aims to achieve nearly €1 billion in annual savings by the year 2027. This strategic move comes on the heels of Infineon's financial report, which revealed a decline in revenues to €7.2 billion for the first half of 2024, down 9% from the previous year.

According to Jochen Hanebeck, the CEO of Infineon, the challenging economic conditions have led to persistent weakness in many end markets. Additionally, semiconductor inventory levels have been decreasing among customers and distributors, further impacting the company's performance. The second-quarter revenue stood at €3.632 billion, showing a decrease from the previous quarter and a significant drop from the same period in 2023, with margins also experiencing a decline from 43% to 38%.

Hanebeck highlighted the ongoing struggles in consumer applications demand and a noticeable slowdown in automotive sector growth. As a result, Infineon now projects revenue growth in the low to mid-single-digit percentage range for the Automotive segment, while anticipating a decrease in revenue for the Green Industrial Power and Power & Sensor Systems segments.

Infineon's cautious approach to the fiscal year outlook has prompted a revision of its revenue forecast, with expectations now set at around €15.1 billion plus or minus €400 million, down from the initial projection of €16 billion. The company is committed to enhancing its competitiveness through the 'Step Up' program, targeting structural improvements in the high triple-digit million euro range annually.

The comprehensive program encompasses a range of measures focusing on manufacturing productivity, portfolio management, pricing quality, and operational cost optimization. Despite reducing capex investments from €2.9 billion to €2.8 billion, Infineon remains dedicated to key projects such as the silicon carbide fab in Kulim, Malaysia, and an analog and mixed signal expansion in Dresden, Germany.