By Mauro Orru


Infineon Technologies is expecting lower sales in its new fiscal year as demand for chips in cars and industrial equipment remains weak.

The German chip maker said revenue in the year to the end of September 2025 would decline slightly from the 14.96 billion euros ($15.94 billion) it reported for fiscal 2024. Its segment result margin--a key profitability measure--is expected to be in the mid-to-high-teens percentage range compared with the 20.8% margin it reported in fiscal 2024.

Infineon said revenue at its automotive business should decline slightly in the year. The company is particularly exposed to car makers since its automotive business generally accounts for the lion's share of annual sales.

Auto makers have been agonizing for months over a slow electric-vehicle market and fierce competition from local car makers in China, which forced several European auto manufacturers to lower their own profit and sales forecasts.

Infineon said it expects revenue at its green industrial power division to decline even more than auto chip sales. The power-and-sensor systems business should see a moderate increase in revenue, while sales at its connected secure systems division are expected to remain more or less stable.

Chip makers have been grappling with uneven demand in recent months. Orders for chips to power artificial intelligence in data centers keep booming, but manufacturers of smartphones, laptops, electric vehicles and industrial machinery haven't placed many new orders for chips lately because they stockpiled the semiconductors they needed years back.

"Currently, there is hardly any growth momentum in our end markets except from AI," Infineon Chief Executive Jochen Hanebeck said in a statement.

The schism in demand for AI chips and other semiconductors created diverging fortunes for chip makers. Those with significant AI exposure like Nvidia have grown exponentially in recent years, but companies that make chips mostly for the automotive sector, industrial equipment and personal electronics have had to cut guidance to reflect sluggish demand.

Infineon said in August that it would cut some 1,400 jobs globally and redeploy another 1,400 to countries with lower labor costs as part of efforts to shore up profitability by fiscal 2028. The company slashed its sales guidance three times in fiscal 2024. Rival STMicroelectronics, which counts Apple, Samsung Electronics and Tesla among its customers, also lowered its annual forecasts several times.

"Short-term ordering patterns and inventory digestion are clouding visibility on demand trends beyond the next couple of quarters," Hanebeck said. "We are therefore preparing for a muted business trajectory in 2025."

Jefferies analysts wrote in a note to clients that setting weak guidance now minimizes the risk of Infineon having to cut it in the coming months. Shares in Frankfurt climbed more than 5% in European morning trading after investors welcomed the company's conservative forecasts.

Infineon proposed a dividend of 0.35 euros a share for fiscal 2024, unchanged from the previous year.

The company booked 3.92 billion euros in sales in the three months to the end of September, down 6% on year.

Infineon swung to a quarterly net loss of 84 million euros from a profit of 753 million euros, while its segment result declined to 832 million euros from 1.04 billion euros, generating a 21.2% margin.

Analysts had forecast quarterly sales of 3.97 billion euros, a profit of 510 million euros, a segment result of 788 million euros, and a 19.9% margin, according to the consensus.

For the current quarter, Infineon is expecting sales of around 3.2 billion euros and a segment result margin in the mid-teens percentage range.


Write to Mauro Orru at mauro.orru@wsj.com


(END) Dow Jones Newswires

11-12-24 0511ET