Chip Market Is Booming, but Supply Constraints Continue
Infineon generated €2.7 billion ($3.24 billion) from sales in Q2, which is about 3% higher compared to a year ago. The company has blamed a Texas winter storm for slowing business sales growth, although the reported number marks a 36% jump year-over-year and comes in higher than the market consensus of €2.63 billion ($3.16 billion).
"The semiconductor market is booming; electronics that help accelerate the energy transition and make work and home life easier remain in high demand. The push for digitalization continues unabated. Infineon is firmly on course to meet its targets for the current fiscal year," said Reinhard Ploss, CEO of the German car company.
Ploss added that demand is currently “greatly” ahead of supply for the majority of products. The company has continued to invest in building additional manufacturing capacities while facilities are “running at full speed.”
“We see bottlenecks in those segments where we depend on chips supplied by foundries, especially in the case of automotive microcontrollers and IoT products. We are doing everything we can to provide our customers with the best possible support in this situation,” Ploss added.
Although Infineon topped market estimates for Q2 business sales, it missed on a key metric — a segment result margin. This business performance indicator, which measures operating profitability, came in at 17.4% compared to the 18.6% expected from the surveyed market analysts.
Still, Infineon managed to raise its guidance for its fiscal Q3 and full-year on robust demand for car chips. The company is now expecting to see business revenues for Q3 in the range of €2.6 billion ($3.12 billion) to €2.9 billion ($3.48 billion). Infineon had previously expected a segment result margin of 17.8% before it raised it to 18%.
For its 2021 fiscal year, Infineon is projecting to generate €11 billion ($13.21 billion), which is higher than the €10.8 billion ($12.97 billion) expected earlier.
For the current quarter, Infineon is calling for sales between €2.6 billion ($3.1 billion) and €2.9 billion ($3.5 billion) and a segment margin of 18% (prior 17.8%). The management said that revenue growth has slowed down due to supply constraints.
Infineon particularly highlighted its strong Q2 performance in the automotive business sector. However, the company notes the ongoing shortage of semiconductor chips has resulted in around “2.5 million cars lost.”
“There are roughly 1.5 million cars not being built in the first quarter, and 1 million vehicles not being built in the second. That’s, we think, the best estimate that currently exists,” Chief Marketing Officer Helmut Gassel said.
The ongoing chip shortage has forced Ford to halt production at its German plants for a few weeks due to a lack of components.
Infineon, a major manufacturer of semiconductor chips for the car industry, has reported better-than-expected results for Q2 sales but the company missed on the business metric that measures operating profitability.
About the Author
Avi Ben Ezra is the CTO and Co-founder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.