Infineon second quarter of 2024 saw 2 percent down on revenue due to stagnant consumer electronics, a deceleration in growth in automotive.
Results for the Infineon second quarter of 2024 fiscal year, which concluded on March 31, 2024, have been released. During the Infineon second quarter of 2024, the company brought in €3,632 million for the Group. Compared to the previous quarter’s €3,702 million in sales, this represented a 2% decline.
“In the prevailing difficult market environment, Infineon delivered a solid second quarter”, says Jochen Hanebeck, CEO of Infineon. “Many end markets have remained weak due to economic conditions, while customers and distributors have continued to reduce semiconductor inventory levels. Weak demand for consumer applications persists.”
“There has also been a noticeable deceleration in growth in the automotive sector. We are therefore taking a cautious approach to the outlook for the rest of the fiscal year and are lowering our forecast. In the medium to long term, decarbonization and digitalization will continue to be strong structural drivers of our profitable growth, continues Jochen Hanebeck”.
“In order to realize the full potential of our Company, we will further strengthen our competitiveness. To this end, we are launching the company-wide “Step Up” program. We are aiming to achieve structural improvements in our Segment Result in the high triple-digit million euro range per year added Jochen Hanebeck.”
Group performance in the Infineon second quarter of 2024 fiscal year
Infineon second quarter of 2024 fiscal year generated Group revenue of €3,632 million. This was 2 percent down on revenue in the prior quarter of €3,702 million.
Revenue in the Power & Sensor Systems (PSS) and Green Industrial Power (GIP) sectors decreased from the previous quarter, while revenue in the Automotive (ATV) segment stayed consistent.
Revenue for the Connected Secure Systems (CSS) sector increased somewhat from the first quarter of the fiscal year 2024. In this Infineon second quarter of 2024 fiscal year, the gross margin was 38.6%, down from 43.2 percent in the previous quarter. The adjusted gross margin for the first quarter of the fiscal year was 41.1 percent, down from 44.9 percent.
Infineon second quarter of 2024 fiscal year, the Segment Result was €707 million, down from €831 million in the previous quarter.
In the second quarter of the 2024 fiscal year, the Non-Segment Result was a net loss of €211 million as opposed to a net loss of €129 million in the previous quarter.
The non-segment result for the second quarter was made up of €91 million for cost of goods sold, €18 million for expenses related to research and development, and €54 million for selling, general, and administrative costs.
It also includes €48 million in net operating expenditures. This amount comprises impairment losses of €37 million from the write-down of assets related to the two backend manufacturing locations in Cavite, Philippines, and Cheonan, South Korea, which are scheduled to be sold.
Operating profit decreased to €496 million in the Infineon second quarter of 2024 fiscal year from €702 million in the previous quarter. In contrast to the previous quarter’s net gain of €25 million, the second quarter of the current fiscal year had a net loss of €12 million.
Interest income of €32 million from the discharge of a tax risk adjustment associated with the Cypress purchase was reflected in the first quarter’s financial results. In the fiscal year 2024, the tax expense for the second quarter was €93 million, as opposed to €134 million in the previous quarter.
Segment Wise Profits for the Infineon Second Quarter of 2024 Fiscal Year
Revenue from the ATV sector was €2,078 million in the second quarter of the 2024 fiscal year, unchanged from €2,085 million in the first. A little lower level of ADAS revenue was offset by rising electromobility revenues.
Revenue from parts for vintage cars remained constant. In the second quarter of the current fiscal year, the Segment Result was €512 million, whereas in the first quarter of the fiscal year 2024, it was €564 million. In contrast to the previous quarter’s 27.1 percent, the Segment Result Margin attained this quarter was 24.6 percent.
Energy and Renewable – Revenue for the GIP division fell by 4% to €469 million in the second quarter of the 2024 fiscal year, from €487 million in the first. The demand for energy infrastructure and renewable energy was lower due to significant direct customer and distributor inventory. In the second quarter of the current fiscal year, the Segment Result was €89 million, whereas in the first quarter of the fiscal year 2024, it was €130 million. As opposed to 26.7 percent in the previous quarter, the segment result margin was 19.0 percent this quarter.
PSS DIVISION: Revenue for the PSS division fell by 7% to €713 million in the Infineon second quarter of 2024 fiscal year, from €765 million in the previous quarter. The continuous low demand for parts for consumer electronics, PCs, laptops, battery-powered gadgets, and microinverters for rooftop solar systems was the cause of the income drop.
The revenue from smartphone components and silicon microphones kept rising. In the second quarter of the current fiscal year, the Segment Result attained was €64 million, as opposed to €99 million in the first quarter. As opposed to 12.9 percent in the previous quarter, the segment result margin was 9.0 percent this quarter.
CSS SECTOR: The revenue for the CSS sector rose somewhat from €364 million in the first quarter to €371 million in the Infineon second quarter of 2024 fiscal year. Higher Wi-Fi sales levels were the primary cause of the 2 percent increase in revenue. From €37 million to €42 million in the previous quarter, the Segment Result increased. From 10.2 percent in the first quarter to 11.3 percent now, the Segment Result Margin is higher.
Outlook for the 2024 Fiscal Year
Revenue for the fiscal year 2024 is now predicted to be around €15.1 billion plus or minus €400 million (formerly projected to be €16 billion plus or minus €500 million), based on an estimated exchange rate of US$1.10 to the euro.
The fiscal year’s estimate was revised as a result of persistently low demand in important target areas and continuous destocking at distributors and direct customers.
Automotive – Revenue growth in the low-to mid-single-digit percentage range is currently anticipated for the automotive category. It is anticipated that the Green Industrial Power segment’s revenue would decline by a low-teens percentage as compared to the previous fiscal year.
It is anticipated that the Power & Sensor Systems category will see a revenue decrease in the high teens, while the Connected Secure Systems segment will see a decline in sales in the low twenties. With €15.1 billion in projected sales for the 2024 fiscal year, the segment result margin is predicted to be around 20 percent, and the adjusted gross margin should be in the low forty percent level.
Investments – Investments in the production modules at the Kulim site (Malaysia) and Dresden (Germany), which are intended to create analog and mixed-signal components and compound semiconductors, will be the main focus.
Outlook for the Third Quarter of the 2024 Fiscal Year
Based on an assumed exchange rate of US$1.10 to the euro, Infineon expects to generate revenue of around €3.8 billion in the third quarter of the 2024 fiscal year.
Revenue in the ATV and CSS segments should grow in-line with group average quarter- on-quarter.
Quarter-on-quarter growth rate for the GIP segment is expected to be below Infineon projects sales of about €3.8 billion for the third quarter of the 2024 fiscal year, assuming an exchange rate of US$1.10 to the euro.
The ATV and CSS sectors’ revenue should increase quarterly in accordance with the group average. It is anticipated in the Third Quarter of the 2024 Fiscal Year that the GIP sector would expand at a slower rate than the group average, while PSS will increase at a faster rate.
The Segment Result Margin should be in the high teens percentage range based on this Group sales prediction.
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