Munich Sold out until next year: On Friday, Jochen Hanebeck takes a seat in the executive chair at Infineon – and is under pressure from the very first minute. Because Germany’s largest semiconductor manufacturer can hardly cope with the flood of orders, customers have to wait months for their goods. The longstanding CEO Reinhard Ploss does not leave an easy legacy to his previous production director.
The Handelsblatt presents the five biggest construction sites of the new Infineon boss:
The main task of the new boss is therefore to build a reliable supply chain, says an insider. But that will be difficult. “We’ve been working on reducing our dependency on Taiwan for a number of years,” said outgoing Infineon boss Ploss recently to the Handelsblatt. To this day, Infineon cannot do without TSMC from Taiwan, the world’s leading contract manufacturer.
Top jobs of the day
Find the best jobs now and
be notified by email.
2. Growth: The competitors are more dynamic
A good nine percent increase in sales per year: That’s what Hanebeck’s predecessor Ploss promised investors over an industry cycle. At first glance, this is an ambitious goal, because according to market observers from Omdia, the industry has grown by an average of 6.8 percent in recent years. However, the consulting firm McKinsey assumes that the semiconductor industry will grow significantly by up to eight percent per year by the end of the decade.
>> Also read: Intel is coming – now what? Europe’s catch-up in chips is just beginning
If Hanebeck sticks to the sales target it has set itself, it will not come back among the ten largest semiconductor manufacturers in the world. After taking over US rival Cypress two years ago, Infineon proudly announced that the company had now entered the top ten. However, the Dax group could not stay there for long, because most of the leading chip manufacturers were more dynamic than Infineon last year.
On Friday, the native of Dortmund will take a seat in Infineon’s executive chair.
(Photo: Reuters)
If Hanebeck wants to return to the top group, Infineon will have to grow much faster. A comparison of the forecasts of the Dax group and the competitors for the first quarter shows, however, that the race to catch up has not yet begun.
3. Higher margin: Infineon lags behind the competition
Infineon is currently earning the best it has been in a decade. Nevertheless, some of the competitors are significantly more profitable. In the fourth quarter of 2021, Bayern achieved a gross margin of 41.5 percent. The French-Italian competitor STMicroelectronics, however, achieved 45.2 percent, NXP from the Netherlands 56.2 percent. US provider Texas Instruments even comes close to 70 percent.
With a similarly high turnover, STMicroelectronics had around 200 million euros more profit in the fourth quarter than Infineon, NXP achieved a significantly higher surplus with significantly lower revenues. Hanebeck knows that he has to act: “We have lost some ground in terms of profitability compared to the competition,” he recently told “Manager Magazin” and announced: “We will tackle this issue together on the board.” Details were given the group does not on request.
4. Capital market: Weak on the stock exchange
Electrical engineer Hanebeck must win back the confidence of investors. In his last few months at the helm of Infineon, his predecessor Ploss did not really succeed: since the beginning of the year, the shares have lost around a fifth of their value. The Dax lost only about eight percent in the same period.
Fund manager Markus Golinski from Union Invest recently said: “The market is concerned that the semiconductor party could soon be over and that the production expansions currently being announced and under construction will soon lead to overcapacity.” But it doesn’t lie: The Philadelphia Semiconductor Index of the largest semiconductor stocks listed in the USA also performed better than Infineon with minus ten percent.
5. The race to catch up with new materials
Infineon is building a new chip factory in Malaysia for two billion euros. With this, Jochen Hanebeck wants to catch up in the business with the innovative materials silicon carbide (SiC) and gallium nitride. The factory is urgently needed, because rival STMicroelectronics has a market share of 50 percent for silicon carbide – not least because of the prestige customer Tesla. In addition, the US competitor Wolfspeed is just getting started with a new SiC factory.
Hanebeck is therefore forced to shift up a gear in the future market. “Efficiency and the range that can be achieved as a result counts for electric cars, which is why SiC is so important,” says Peter Fintl, chip expert at the consulting firm Capgemini. The automotive industry accounts for a good 40 percent of Infineon’s sales.
>> Also read: “Every Mercedes will be equipped with our chips”: US companies are pressuring German car manufacturers
The SiC chips are currently still being produced on disks with a diameter of 150 millimeters. However, the industry is currently in the process of switching to 200 millimeter large, so-called wafers. “This is an important technological leap that brings enormous cost advantages,” explains consultant Fintl. If Infineon wants to play a leading role in the business in the long term, this leap must succeed.
The first chips should leave the new factory in Kulim in the second half of 2024. It will be an important milestone against which Hanebeck will have to be measured. However, it was only last year that the electrical engineer proved that he is able to set up new plants on time and within budget: in the new factory in Villach, the machines were even running three months earlier than planned.
More: Atomic mirrors should enable the next generation of chips