The Dax group offers more and more software for its chips.
(Photo: dpa)
Munich The chip manufacturer Infineon is investing heavily in software. The number of software developers has doubled in the past two years to 1700, says digital boss Constanze Hufenbecher the Handelsblatt. “Software is becoming more and more important for Infineon. It’s about offering system solutions, ”explains the manager. The 51-year-old became the first woman to move into the Dax Group’s board of directors in April.
“With our software, we help customers of all sizes to integrate chips more easily and bring products to market faster,” adds Hufenbecher. Germany’s largest semiconductor manufacturer hopes to tap into completely new customer groups, for example start-ups.
Software plays a crucial role in CEO Reinhard Ploss’ growth plan. Instead of individual products, the 65-year-old wants to increasingly offer complete solutions across the entire group, i.e. chips and the associated programs. Infineon does not earn any money with the software alone: there are combination offers such as operating systems for electronic components, but also encryption software for data on the semiconductors.
This should help to increase sales by an average of nine percent year after year and thus to grow faster than the semiconductor market as a whole. The operating margin should be 19 percent across an industry cycle. A value that Infineon has never achieved in the past few years.
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The digital boss of the chip company is pushing the software development.
(Photo: Infineon)
Software is particularly important for the Connected Secure Systems (CSS) division. Among other things, it supplies security chips. This allows people and machines to be authenticated, confidential data to be protected and unauthorized changes to networked machines and devices to be detected.
These programs are also always sold in connection with the chips. For example, Infineon offers so-called firmware that enables the basic functionality of devices. Additional functions can be added using additional program code. Certain semiconductors are also equipped with a development kit that customers can use to program easily themselves.
The Infineon software is attractive to small customers
This is particularly attractive for small companies, says CSS boss Thomas Rosteck: “We are now addressing tens of thousands of companies that develop applications for the Internet of Things. With our software, they can concentrate fully on their core competencies. ”Many young companies are working on so-called wearables, ie portable electronics. “We help our customers with our software to stand out from the competition,” said Rosteck.
With the purchase of the US competitor Cypress, Infineon has built up additional software competence, emphasizes Rosteck. The Munich-based company put nine billion euros on the table for the Silicon Valley group in spring 2020. “The takeover of Cypress has brought us massive progress,” says Rosteck. For example, a large software location was added in Ukraine.
In Germany, the programming competence is located in Augsburg, among other places. Here the group currently employs 109 specialists who develop software for CSS security chips; for example for payment cards, for computer clocks, passports or networked vehicles. It is one of the few Infineon locations worldwide that has completely focused on software. The workforce in Swabia is expected to soon grow to more than 120 employees.
Analysts believe in the Group’s strategy. Due to the focus on the growth areas of mobility, security, energy efficiency, the Internet of Things and data management, the medium-term prospects are promising, says Dirk Schlamp from DZ Bank. In view of the enormous chip demand, another year of growth can be expected in 2022 anyway.
The current chip shortage is a good stage for those companies whose semiconductors are used for digitization, says Goldman Sachs analyst Alexander Duval. This also includes Infineon.
Infineon is completely booked out
In any case, there is no shortage of orders, on the contrary. Infineon cannot keep up with the deliveries and has to allocate the chips. For the fiscal year that began on October 1, CEO Ploss promises a 15 percent increase in sales. The operating margin is expected to climb to 21 percent, three percentage points more than in the previous financial year, which was already exceptionally successful.
Investors are correspondingly confident. In the past four weeks, the price has fallen by almost ten percent. Nevertheless, the papers have gained a good quarter in value since the beginning of 2021. For comparison: The Dax comes in the same period on a plus of only 16 percent. Most analysts assume that the paper will rise again by around a fifth within a year.
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