Since then, the papers listed in the leading index Dax have lost value. Investors are unsure: will Infineon actually grow more than ten percent year after year, as Hanebeck promised? Is it possible to permanently increase the operating margin to 25 percent – six percentage points more than before?
Investors and bankers are skeptical: Jefferies analyst Janardan Menon warns that the industry cycle is losing momentum. He predicts a price slump in Europe’s largest semiconductor manufacturer by around a third within a year.
So has the CEO, who has been in office since April, laid it on too thick? Not necessarily. Hanebeck’s squad has already proven in some areas of the group that the plan for the future can work. This is exemplified by the Power & Sensor Systems (PSS) division, which supplies, among other things, chips for the power supply of network computers, the so-called servers.
Top jobs of the day
Find the best jobs now and
be notified by email.
The division’s sales have increased by an average of 15 percent in each of the past five years. The operating margin was always above 20 percent. In the last fiscal year, which ended on September 30, it was 28 percent.
“It’s important to work at system level,” explains division head Adam White in an interview with Handelsblatt. It is not enough to offer individual semiconductors. Customers are prepared to pay more for comprehensive solutions. These included, for example, advanced housings for complete modules, in which several components are combined.
Another success factor is working together with other suppliers in order to be able to offer the best possible solutions. When it comes to servers, these are companies like AMD, Intel or Nvidia. “We work closely with the processor manufacturers,” says White.
Europe’s largest chip manufacturer should grow faster and become more profitable.
(Photo: dpa)
The Briton has been in charge of the area, which accounts for almost 30 percent of sales, since the beginning of June. His appointment was one of Hanebeck’s first important personnel decisions.
The fact that the Infineon boss sees PSS as a role model is proven by another personality: White’s predecessor Andreas Urschitz brought the 54-year-old to the board as head of sales in the spring. The Austrian is now trying to implement the PSS concept throughout the group.
“Of course we will continue to sell individual chips in the future,” emphasizes Urschitz in the Handelsblatt interview. “But we offer them to customers in bite-size form if possible. They are willing to pay higher average prices for this.”
The new size is paying off at Infineon
In the chip industry, Infineon has so far been seen as a supplier who was reluctant to raise prices. That has changed. Urschitz puts it this way: “I am convinced that Infineon can take a fair share of the profits in the value chain.”
In his first financial year at the top, Hanebeck achieved an operating margin of 24 percent; that is significantly more than his predecessor Reinhard Ploss managed.
The fact that it should be two percentage points more in the future is also due to the newly gained size. Economies of scale are important in the chip industry. Infineon has recently grown by leaps and bounds. In the past two financial years, revenues have shot up by 29 percent. That corresponds to a turnover of more than five billion euros.
>> Read here: 70 percent price increase this year – chip suppliers Aixtron is successful in the niche
Now the factories can be better utilized. Most recently, the group opened a 1.6 billion euro plant in Villach, Austria, last year. The expansion allows Hanebeck to produce more chips on 300 millimeter wafers. This is more efficient than on the previously standard 200 millimeter discs.
The car division, which Hanebeck led himself for years, also benefits from the group’s newly gained size. In the past quarter, it accounted for 47 percent of the proceeds. For years, the area was not very profitable.
“In the beginning we invested a lot in electromobility,” says Division Manager Peter Schiefer. In view of the boom in electric vehicles, this is now paying off. “Scaling helps us,” emphasizes Schiefer. The division’s operating margin rose by ten percentage points to a good 26 percent in the most recent quarter compared to the previous year.
“It used to be almost impossible to raise prices,” says the manager. In view of the industry-wide supply shortages for autochips, things are different now. Customers should be happy when they receive the quantities they have ordered on time. Infineon is also considering taking down payments, reports Schiefer.
>> Read here: “The Switzerland of chips” – How Europe’s unknown tech forge shapes our future
If Hanebeck implements its growth plans as announced, the group will leave the industry behind. Market researchers at Gartner expect industry revenues to fall by a good three percent next year.
The fact that many other chip manufacturers are doing so poorly is due to the weak business with memory chips and processors for computers and smartphones. These are areas in which Infineon is not active. The Munich company mainly sells power semiconductors, as well as sensors and minicomputers, so-called microcontrollers. These are rather crisis-proof segments.
Meanwhile, the most important European competitor has set itself even more ambitious goals. The French-Italian rival STMicroelectronics expects an operating margin of more than 30 percent from 2025.
Infineon does not fear a crisis
Hanebeck’s team is confident that big words will be followed by deeds, despite the economic downturn, energy crisis and inflation. “Even if the number of cars sold were to fall, we will sell more semiconductors every year,” says Schiefer, head of the auto division.
With automated driving and electromobility, the value of semiconductors in vehicles will double by the end of the decade. PSS boss White is also optimistic: “The fundamental growth trends are intact, even in turbulent times.”
Experts take a similar view: DZ Bank analyst Dirk Schlamp believes that the company can convince with sustained positive business development, a record order backlog of EUR 43 billion and the increase in medium-term margin targets.
On average, the analysts expect the price to climb a fifth in the next twelve months. Now only the investors have to gain confidence in Hanebeck’s strategy.
More: High energy prices are driving the business with energy-saving chips