Q1 2025 Infineon Technologies AG Earnings Call - Press Conference

February 4, 2025

Raymond O'Hagan: My name is Raymond O'Hagan. for the first quarter of the current year.

I mean, it definitely but I am on one hand.

Speaker Change: Ladies and gentlemen, good morning, and welcome to the publication.

Speaker Change: The key financials for the first quarter of the car.

Speaker Change: Current fiscal year.

Speaker Change: Uh huh.

Speaker Change: We would like to point out to you.

Speaker Change: And that all participants are in listening mode.

Operator: and also that the press call may not be recorded. After the presentation, you can ask a question by pressing star 1. If you need the assistance of an operator, please press star 0.

Speaker Change: And also that the press call may not be recorded after the presentation. You can ask a question by pressing star one if you need the assistance of an operator, Please press star zero.

Speaker Change: I would not like to hand, the floor to Florian Martens. Thank you very much good morning, ladies and gentlemen, Dear colleagues and coworkers I'd like to welcome you to our conference call on the results of the first quarter of fiscal 2025.

Florian Martin: I would now like to hand the floor to Florian Martin. Thank you very much. Good morning, ladies and gentlemen, dear colleagues and co-workers.

Florian Martens: Thank you very much. Good morning, ladies and gentlemen, dear colleagues and coworkers. I'd like to welcome you to our conference call on the results of the Q1 of fiscal 2025 of Infineon Technologies AG. Participating on behalf of the Board of Management of Infineon are Jochen Hanebeck, CEO, and Dr. Sven Schneider, CFO. My dear listeners, as usual, Mr. Hanebeck will start by giving you an overview of the business trend of Infineon. After that, Mr. Hanebeck and Mr. Schneider would be happy to answer any questions you may have. Our conference call will end at 8:45 on the dot. As a matter of course, our press team under Andre Taube and I will be available for any questions after that. Now I'd like to hand the floor to Jochen Hanebeck.

Florian Martin: I'd like to welcome you to our conference call on the results of the first quarter of Cisco 2025 of Infineon Technologies AG. Participating on behalf of the Board of Management of Infineon are Jochen Hanebeck, CEO, and Dr. Sven Schneider, CFO.

Speaker Change: Infineon technologies AG participating on behalf of the board of management have been opinion are Johann.

Speaker Change: <unk> CEO and Dr. French Knight CFO, my Dear listeners as usual Mr. Han epic will start by giving you an overview of the business trend us Infineon after that Mr. Han and Mr. Schneider would be happy to answer any questions. You may have our conference call will end at 845 on the dock and as a matter of course.

Florian Martin: My dear listeners, as usual, Mr. Hanebeck will start by giving you an overview of the business trend of Infineon. After that, Mr. Hanebeck and Mr. Schneider will be happy to answer any questions you may have.

Florian Martin: Our conference call will end at 8.45 on the dot. And as a matter of course, our press team under Andre Taube and I will be available for any questions after that.

Speaker Change: Our press team under Andre talked about and I will be available for any questions. After that I would now I'd like to hand, the floor to your <unk> Hello.

Jochen Hanebeck: Now I'd like to hand the floor to Jochen Hanebeck. Jochen Hanebeck, CEO, Infineon Technologies AG Hello. Thank you, Florian. Hello and welcome.

Jochen Hanebeck: Thank you, Florian. Hello and welcome. Welcome, listeners. Infineon is celebrating its 25th anniversary this year as an independent listed company. In that quarter of a century, we've strategically aligned our business to the most attractive fields of growth. During the transformation, there was always a question of being able to distinguish short-term and often cyclical market behavior from the long-term structural trends, and that is still the case today. At the beginning of this year, the cyclical weakness in the semiconductor market continued. In many of our target markets, in the automotive, industrial sector, inventories are still being digested. In the course of the year, we expect, as we announced in November in our guidance, that there will be a slight recovery in the demand. Irrespective of the current market weakness, our long-term growth drivers in the field of decarbonization, digitalization still offer great opportunities for Infineon.

Mr. Han: Thank you Florian Hello, and welcome.

Jochen Hanebeck: Welcome listeners, Infineon is celebrating its 25th anniversary this year as an independent listed company. In that quarter of a century, we've strategically aligned our business to the most attractive fields of growth. During the transformation, there was always a question of being able to distinguish short-term and often cyclical market behavior from the long-term social trends, and that's still the case today. Even if this year the cyclical weakness in the semiconductor market continued, in many of our target markets of the automotive industrial sector, inventories are still being digested. In the course of the year, we expect, as we announced in November in our guidance, that there will be a slight recovery in the demand.

Speaker Change: Welcome to.

Speaker Change: Infineon is celebrating 22 50.

Speaker Change: Through this year as an independent listed company in that quarter of a century, we've the digitally aligned.

Speaker Change: Business to see my subtractive fields of growth.

Speaker Change: During the transformational it's always a question of.

Speaker Change: Being able to distinguish short term and after the cyclical market behavior from the long term structural trends and that's still the case today at the beginning of this yeah. The cyclical weakness in the semiconductor market continued and many of them talking about just the automotive industrial sector.

Speaker Change: Inventories are still being digested in.

Speaker Change: In the coastal T O. We expect as we announced in November and our guidance.

Speaker Change: It will be a slight recovery in demand.

Jochen Hanebeck: Irrespective of the current market weakness, our long-term growth drivers in the field of decarbonization and digitalization still offer great opportunities for Infineon, the global trend to lasting and sustainable growth. The trend to most of them digitalized versus unbroken companies are trying to reduce includes two trillion U.S. dollars of clean energy tolerance and infrastructure. in digitalization. We're seeing advances in all fields of life, which is leading to a growing demand for advanced semiconductors.

Speaker Change: Irrespective of the current market weakness, how long term growth drivers in the field decarbonization digitalization, it's still a great deal, but just folk and opinion the global trends two lasting and.

Jochen Hanebeck: The global trend to sustainability and digitalization. Companies are trying to reduce their emissions and to secure their power supplies in the long term, and are investing in this. International Energy Agency expects that the global energy investments in 2024 will, for the first time, exceed $3 trillion. $3 trillion, and that includes $2 trillion of clean energy technologies and infrastructure. In digitalization, we're seeing advances in all fields of life, which is leading to a growing demand for advanced semiconductors. I'd like to begin by looking back at the business developments at the beginning of fiscal 2025. In a weak market environment, Infineon held its ground well, and in Q1, slightly better than expected.

Speaker Change: Yeah.

Speaker Change: Or are they tend to most of them are digital asbestos I'm broken companies that were trying to reduce.

Speaker Change: This is the emissions and to secure that power supplies and long term and investing in this into the international energy agency's expects that the global energy investments and tuck ins and for well for the first time exceed 3 billion trillion U S dollars three trillion U S stores.

Speaker Change: That's.

Yes.

Speaker Change: That includes two trillion U S dollars of clean energy and infrastructure.

Speaker Change: In digitalization.

Speaker Change: We are seeing advances in all fields of life, which is leading to a growing demand for it.

Speaker Change: Advanced semiconductors.

Jochen Hanebeck: I'd like to begin by looking back at the business developments at the beginning of fiscal 2025. In a weak market environment, Infineon held its ground well. And in the first quarter, it was slightly better than expected. Here, Infineon achieved revenue of €3,424,000,000, which is at around 13% compared to the previous quarter, but revenue was about €200,000,000 better than our forecast. About half of that is due to the strong US dollar, and the actual exchange rate vis-à-vis the euro was 1.07 in the first quarter. In a November forecast, we'd base ourselves on 1.10. In addition, there's a slightly better volume development than originally expected.

Speaker Change: I'd like to begin by looking back at the business, but I missed the beginning of fiscal 2025, and a weak market environment and fitness hesitant swelled ground well.

Speaker Change: And then the first quarter slightly better than expected. He infineon achieved revenue of 3 billion falling from 24 million euros, which is a decline by 13% compared to the previous quarter, but revenue was about 200 million euros purchase on a forecast about half of that is due to the strong data store.

Jochen Hanebeck: Here, Infineon achieved revenue of EUR 3,424 million, which is a decline by 13% compared to the previous quarter. Revenue was about EUR 200 million better than our forecast. About half of that is due to the strong US dollar, and the actual exchange rate vis-a-vis the euro was 1.07 in Q1. In a November forecast, we'd based ourselves on 1.10. In addition, there was a slightly better volume development than originally expected. The segment result declined to EUR 573 million. As a result, the segment result margin dropped from 21.2% in the previous quarter to 16.7%. The development reflects the expected decline in revenue and the high costs of the underutilization of our fabs.

Speaker Change: On the actual exchange rate.

Speaker Change: The Euro was one point out of seven in the first quarter and November forecast, we base ourselves on one point 10, and additional is that slightly better volume development Summit Ridge I expected the segment to result.

Jochen Hanebeck: The segmental result... declined to €573 million as the second result margin. dropped from 21.2 percent in the previous quarter to 16.7 percent. Expected decline in revenue and the high cost of the underutilization of our fabs. On the other hand, there was a one-off compensation payment which had a positive effect on our margins. taking into account the positive currency effect. The free cash flow was on the same level as the previous year. As expected, free cash flows have the same seasonal pattern. It was 237 million euros minus, and the previous quote was 1 billion, 145 million euros.

Speaker Change: <unk> declined to 573 million euros.

Speaker Change: Felt marching.

Dropped from 21, 2% in the previous quarter to 16, 7% the development reflects the Oh.

Speaker Change: Hey, I expected decline in revenue and the high cost of the under utilization of our.

Speaker Change: Fabs on.

Jochen Hanebeck: On the other hand, there was a one-off compensation payment, which had a positive effect on our margins. Taking into account the positive currency effects, the free cash flow was on the same level as the previous year. As expected, free cash flow had the same seasonal pattern. It was EUR -237 million, and the previous quarter was EUR 1,145 million. This included payments received from various subsidies and planned customers advance payments and positive effects of the operating capital. The factors also included the fact that the variable remuneration was paid in this quarter. Now the results of the divisions. Automotive division achieved revenue of EUR 1,919 million as affected by customers reducing their inventories considerably. This had enhanced the negative effect on revenue, which is as a seasonal effect anyway.

Speaker Change: On the other hand, there was a one off compensation payment, which had a positive effect on.

Speaker Change: Margins.

Speaker Change: Okay.

Speaker Change: Taking into account the positive currency effects.

Speaker Change: They are.

Speaker Change: Free cash flow at Wassa, all at the same level as the previous year as expected free cash strikes have had the same.

Speaker Change: Seasonal patent.

Speaker Change: It was 237 million euros minus in the previous call. It was 1.145 billion euros.

Jochen Hanebeck: This included payments received from... various subsidies and planned customers advance payments and post effects of the operating capital. The factors also included the fact that the variable remuneration was paid in this quarter. Now as a result of the divisions, Automotive Division achieved revenue of €1,919,000,000 as expected, customers reducing their inventories considerably. enhanced the negative effect on revenue, which is a seasonal effect anyway, nevertheless. There was a decline of 11% which was compared to the previous. quarter, but that was less than expected. The second result was... 360 million euros on segment result margin declined from 25.6% previous quarter to 18.9% This included the cost of the capacity underutilization and an unfortunate product mixture effect.

Speaker Change: This included.

Speaker Change: Payments received from <unk>.

Speaker Change: Various.

Speaker Change: Subsidies and planned customers advanced payments and plus the effects of the operating capital for.

Speaker Change: The factors also include the fact that they are variable remuneration was paid in this quarter.

Speaker Change: So it's all of the divisions automotive division achieved revenue of one bill.

Speaker Change: 919 million euros, that's affected customers, reducing their inventories considerably this had.

Speaker Change: Yeah.

Speaker Change: And Hans the negative effect on revenue, which is.

Speaker Change: That's a seasonal effect anyway. Nevertheless.

Jochen Hanebeck: Nevertheless, there was a decline of 11%, which was compared to the previous quarter, but that was less than expected. The segment result was EUR 363 million, and segment result margin declined from 25.6% previous quarter to 18.9%. This included the costs of the capacity underutilization and an unfortunate product mixture effect. In the short term, the digestion of inventories in the entire automotive supply chain will hamper the amount of revenue. Market analysts expect that the number of vehicles produced in 2025 will remain unchanged compared to the previous year. In view of the uncertainties concerning tariffs and trade, the structural trend will continue with more semiconductors per vehicle. Assist and partially automatic driving functions will advance at a healthy speed.

Speaker Change: There was a decline of 11%, which was a competitor of previous.

Speaker Change: Caught up but that was less unexpected.

The second myself.

Speaker Change: Yes.

Speaker Change: 363.

Speaker Change: Million euros on segment margin declined from 25, 6% the previous quarter to 18 four 9%.

Speaker Change: This included the costs of the capacity Underutilization and I'm fortunate to product a mixture effect.

Jochen Hanebeck: In the short term, the digestion of inventories in the entire automotive supply chain will hamper the advantage of revenue. market analysts expect that the number of vehicles produced in 2012 will remain unchanged compared to the previous year in view of the uncertainties concerning tariffs and trade. The structural trend will continue. with more semiconductors per vehicle. Assistant Partially Automatic Driving Functions will advance at a healthy speed. use of electric vehicles will vary from one region to another, and in China in particular it remains the biggest market and it is also very innovative for electric vehicles. There will also be scrappage rewards and...

Speaker Change: In the short term the digestion of inventories and the entire automotive supply chain.

Speaker Change: Will hamper that if he had wanted to revenue.

Speaker Change: Market analysts expect that the number of vehicles produced in 'twenty five.

Speaker Change: Will it remain unchanged compared to the previous year.

In view of the uncertain as something tariffs and.

Speaker Change: Trade the structural trend will it continue.

Speaker Change: With more semiconductors per vehicle.

Speaker Change: Our system, partially automatic driving functions well.

Speaker Change: Advance after healthy speed the.

Jochen Hanebeck: The use of electric vehicles will vary from one region to another, and in China, in particular, it remains the biggest market, and it is also very innovative for electric vehicles. There will also be scrappage rewards and payments made for older vehicles, which means that we expect to be in the with growth in the mid-teens % range. We remain in the pole position compared to our competitors, and I'd like to give you some examples here. A major vehicle manufacturer from China substantially increased the number of silicon carbide modules ordered from us. In addition, we had a major design win with a new 1200-volt silicon carbide chip at the ZF automotive supplier. Thanks to this form factor, the chips can be easily and scalably introduced in traction inverters. The semiconductors will be used in cars in the premium section.

Speaker Change: Use of electric vehicles will vary from one region to another.

Speaker Change: China in particular it remains the biggest market under it is also very innovative for electric vehicles.

Speaker Change: There will also be a scrappage rewards and <unk>.

Jochen Hanebeck: Payments made for older vehicles, which means that in the we expect to be in the with growth in the mid-teen percent range We remain in the pole position compared to our competitors, and I'd like to give you some examples here. a major vehicle manufacturer from China. Substantially recent number of silicon carbide modules ordered from us. In addition, we had a major design win with a new 1200 V silicon carbide chip at the ZF automotive supplier. Thanks to this form factor, the chips can be easily and scalably introduced in traction inverters. The semiconductor... will be used in cars in the premium section.

Speaker Change: Payments made for older vehicles, which means that.

Speaker Change: And I'd say, we expect to be in the ER.

Speaker Change: With growth in the mid teen percent range.

We remain in the pole position compared to our competitors and that ought to give you. Some examples here.

Speaker Change: Major vehicle manufacturers in China.

Speaker Change: Substantially reduced the number of silicon carbide modules ordered from US. In addition, we had a major design win with a new 1200 volt Silicon carbide chip at the said F. Automotive supplier. Thanks to this form factor the chips can be.

Speaker Change: Be easily and scalable introduced and traction inverters.

Dr <unk>.

Speaker Change: <unk> will be used in quarters in the economy and the premium section. They design win has a volume of the mid three figure million Euro range.

Jochen Hanebeck: The design win has a volume of the mid-three-figure million EUR range. In 2024, market research data showed that we're the fastest growing company. We grew twice as fast as the market and were able to increase our market share to about 20%. The market dynamism at present allows us to draw the conclusion that in the next year we shall grow more quickly than other established manufacturers of silicon carbide solutions. Another success to report is excellent cooperation with the leading Chinese electric vehicle manufacturer. They have a wide range of products of ours in use, including the OptiMOS 7 power transistors, sensors, and a wide range of microcontrollers. Let's come to Green Industrial Power. Starting from revenue level of EUR 500 million in the previous quarter, the division exhibited the expected sharp decline in December quarter.

Jochen Hanebeck: The design win has a volume of the mid three-figure million euro range. In 2024, market research data showed that we are the fastest growing company. We grew twice as fast as the market and were able to increase our market share to about 20 percent. The market dynamism at present allows us to draw the conclusion that in the next year we shall grow more quickly than other established manufacturers of silicon carbide solutions. Another success to report is excellent cooperation with the leading Chinese electric vehicle manufacturer. They have a wide range of products of ours in use, including the OptiMos 7 power transistor sensors and a wide range of microcontrollers.

Speaker Change: Yeah.

In 'twenty to 'twenty four.

Speaker Change: Market research sensors out there with the fastest growing company, we grew twice as fast as the market and we're able to increase our market share to about 20% the market dynamism are present.

Speaker Change: This is Charles intrusion that in the next year, we should grow more quickly than others topics manufacturers of Silicon carbide solutions. Another success to report is yep excellent cooperation with a leading Chinese electronics.

Speaker Change: Vehicle manufacturer.

Speaker Change: They have a wide range of products of ours and use including the Optimus seven power transistors sensors and a wide range of Microcontrollers.

Jochen Hanebeck: Let's then come to green industrial power, starting from revenue level of 500 million euros in the previous quarter. The division Exhibited the expected sharp decline in December quarter 340 million euros was made the seasonal development even worse. Because of the decline in revenue and the falling prices, the signal result dropped to 34 million Euros, whereas the signal result margin in the systemic quarter has been 10%. The cyclical market weakness in industrial applications continued in 2025. The Global Purchasing Managers Index still had low values, and depending on the field of application, the digestion of stocks will depend on the demand among end-users.

Speaker Change: That's then come to Green industrial power starting from revenue level of 500 million euros in the previous quarter the division.

Speaker Change: Exhibited they expected sharp decline in the December quarter 340 million euros was.

Jochen Hanebeck: EUR 340 million was 32% less. The weak market momentum and the digestion of inventories in the supply chain made the seasonal development even worse. Because of the decline in revenue and the falling prices, the segment result dropped to EUR 34 million, whereas the segment result margin in the September quarter being 10%. The cyclical market weakness in industrial applications continued in 2025. The Global Purchasing Managers' Index still had low values, and depending on the field of application, the digestion of stocks will depend on the demand among end users. In industrial applications, the structural demand in view of the global demand for energy supply and energy efficiency remains intact. Solar and wind energy are still the cheapest forms of energy production in many regions.

Speaker Change: 32% less the weak market.

Speaker Change: Momentum months, a digestion of inventories in the supply chain.

Speaker Change: Made the seasonal development, even worse because of the decline in revenue and the falling prices the second ourselves dropped.

234 million euros, whereas the second herself marching in.

Chemical would've been 10%.

Okay.

Speaker Change: The cyclical market weakness in industrial applications continued in 'twenty or 'twenty five global purchase money index.

Still had low values.

Speaker Change: And depending on the field of application.

The digestion of stocks will depend on let's say.

Demand among end uses and industrial applications the structural demand.

Jochen Hanebeck: In industrial applications, the structural demand, in view of the global demand for energy supply and energy efficiency, remains intact. Solar and wind energy are still the cheapest forms of energy production in many regions. In the field of energy infrastructure, demand for energy storage systems and highly efficient power supply solutions are robust, which is due to the considerable expansion of AI data centers. And also in rail traffic, there's a continuous investment in infrastructure and electrification. In the second half of the fiscal year, we expect a gradual recovery. With our leading offer of power supply solutions, we shall benefit in full from the coming upswing.

Speaker Change: In view of the global demand for energy supply and energy efficiency remains intact solar and wind energy are still the most that's the cheapest forms of energy production in many regions and say your field of energy infrastructure demand for energy storage systems.

Jochen Hanebeck: In the field of energy infrastructure, demand for energy storage systems and highly efficient power supply solutions are robust, which is due to the considerable expansion of AI data centers. Also in rail traffic, there is a continuous investment in infrastructure and electrification. In the second half of the fiscal year, we expect a gradual recovery. With our leading offer of power supply solutions, we shall benefit in full from the coming upswing. Now the Power & Sensor Systems segment. Revenue in Q1 was EUR 820 million. That is a relatively small decline by 5% compared to the previous quarter. The consumer smartphone business exhibited the usual seasonal weakness, but our power supply solutions for AI data centers grew in an unbroken manner.

Highly efficient power supply solutions.

Robust, which is due to the considerable expansion of AI data centers.

Speaker Change: And also in rail traffic, there's a continuous investment in the infrastructure in electrification and the second half of the fiscal year, we expect a gradual recovery with a leading offer of power supply solutions, we shall benefit in full from the coming upswing.

Jochen Hanebeck: Now, the power and sensor system segment. Revenue in the first quarter was €820 million. That is a relatively small decline by 5% compared to the previous quarter. The consumer smartphone business exhibited the usual seasonal weakness, but our power supply solutions for AI data centers grew in an unbroken manner. The opposite direction to revenue, the second result... Improved to $149 million and the margin rose to 18.2%, falling 12.2% in the previous quarter. That includes the compensation payment by a customer, which I mentioned at the beginning.

Speaker Change: Now the pound sensor systems segment.

Revenue in the first quarter was 820 million euros that is a relatively small decline by 5% compared to the previous quarter. The consumer smartphone business exhibited the usual seasonal weakness, but a power supply solutions for data centers.

Speaker Change: Grew on an unbroken manner compared.

Jochen Hanebeck: In the opposite direction to revenue, the segment result improved to EUR 149 million, and the margin rose to 18.2%, following 12.2% the previous quarter. That includes the compensated payment by a customer which mentioned at the beginning. Now the organizational changes. At PSS, we have formed a new business unit, which we are calling Sensor Units and Radio Frequency or SURF in brief. Our automotive sensor business, to put this in its context, it achieved revenue of EUR 700 million in the fiscal year, and this has been transferred to the new organization of PSS as of 1 January 2025. The merging of the competencies brings many advantages, which means there will be synergies in such development, accelerated developments, and value for the solutions for our customers.

Uh huh.

They are in the opposite direction to revenue the segment result.

Speaker Change: Improved to 149 million SUNS the margin rose to $18, 2%. Following 12, 2% in previous quarter that includes they come to save paying payment by customers you mentioned at the beginning not organizational changes at peer says we have find out new business unit, which we're calling sensor units and radio.

Jochen Hanebeck: Now, the organizational changes. At PSS, we have found a new business unit, which we are calling Sensor Units and Radio Frequency, or SURF, in brief. Automotive Sensor Business To put this in its context, it achieved revenue of 700 million euros in the fiscal year. and this has been transferred to the new organization of PSS as of 1st of January 2025. Merging of the competences brings many advantages, which means there will be synergies in such a development and accelerate developments and value for the solutions for our customers. Trends to green energy, clean and safe mobility and smart things are divided among four sensors and radio frequency solutions and this will strengthen our competition and will become even more hard-hitting Considering the target markets of PSS, we can see that consumer computer and communication applications have bottomed out in the meantime.

Speaker Change: Frequency or surf and brief.

Speaker Change: Our automotive sensor business.

Speaker Change: To put this in.

Speaker Change: Its context has achieved revenue of 700 million euros in the fiscal year.

Speaker Change: And this has been transferred to the new.

Speaker Change: Translation of P. S says that so first of January 2025.

Speaker Change: The.

Speaker Change: But matching of the competence is brings many advantages, which maintenance there will be synergies in such environment and.

Speaker Change: Accelerate developments and value for say the solutions for our customers' trends to green energy clean and.

Jochen Hanebeck: Trends to green energy, clean and safe mobility, and smart internet of things are driving demand for sensors and radio frequency solutions. This will strengthen our competition and will become even more hard-hitting. Considering the target markets of PSS, we consider consumer, computing, communication applications have bottomed out in the meantime. In these fields of application, a cyclical correction began first. In the current quarter, the reduction in inventories will, however, still cause a headwind. In our silicon microphones, which are the leaders in the industry, and they're used in smartphones and accessories, there it looks a bit better. In PCs, we also expect a growing demand because of new models coming to the market. As I mentioned, the power supply solutions for AI data centers causes a very robust demand. With our highly attractive market, we are in a good position.

Speaker Change: Safe mobility smart these wont undertake things I've provided the demand for sensors and radio frequency solutions and.

Speaker Change: This will strengthen our competition and will become even more hard hitting.

Speaker Change: Considering they target market appears as.

Speaker Change: We can see the consumer computing and communications applications have bottomed out in the meantime in these fields of application of sickle correction began first in the current quarter.

Jochen Hanebeck: In these fields of application, a signal correction began first. In the current quarter The reduction in inventories will, however, still cause a headwind. In silicon microphones, which are the leaders in the industry, and they're used in smartphones and accessories, there it looks a bit better. And in PCs, we also expect a growing demand because of new models coming to the market. As I mentioned, the power supply solutions for AI data centers causes a very robust demand. With our highly attractive market, we are in a good position. With our product portfolio covering the entire power supply from the grid to the processor, our business is growing very dynamically.

Speaker Change: The reduction in inventories will however, still cause a headwind.

Speaker Change: In our silicon microphone, which are the leaders in the industry and they used in smartphones and accessories, there it looks a bit better and in a P. C's. We also expect a growing demand because of new bottles coming to the market.

Speaker Change: I mentioned the power supply solutions for data centers.

Speaker Change: Of course is a very robust demand with a highly attractive market. We are in a good position with our product portfolio covering the entire power supply from the grid to the processor business.

Jochen Hanebeck: With our product portfolio covering the entire power supply from the grid to the processor, our business is growing very dynamically. Our revenue in this field will be more than doubled to EUR 600 million. That's EUR 100 million more than forecast in November. Within two years, we expect to reach the EUR 2 billion revenue threshold. Now, Connected Secure Systems. In Q1, the division achieved revenue of EUR 340 million, which is a decline of 15% compared to the September quarter. Most fields of application of CSS were affected by this development. That illustrates the lasting weakness of the consumer and IoT markets. Because of the drop in revenue, the segment result declined. It was EUR 30 million. Segment result margin was 8.7%, and the previous quarter it was 15.3%.

Speaker Change: Business is growing very dynamically our revenue in this field will be more than doubled to 600 million euros.

Jochen Hanebeck: Our revenue in this field will be more than doubled to 600 million euros. That's 100 million euros more than forecast in November. Within two years, we expect to reach the billion-euro revenue threshold.

Speaker Change: That's 100 million yours malls and forecast in November within two years, we expect to reach the two.

Speaker Change: Billion Euro revenue.

Speaker Change: Threshold now connected to cause our systems in the first quarter. The Division Street revenue of 340 million yours, which is Atlanta, and 15% compared to the September quarter.

Jochen Hanebeck: Now, Connect2CSS systems, in the first quarter, the division achieved revenue of 340 million euros, which is a decline of 15% compared to the September quarter. Most fields of application of CSS were affected by this development. That illustrates the lasting weakness of the consumer and IOT markets because of the drop in revenue, the second result declined, it was 30 million Euros, the second result margin was 8.7% and the previous quarter it was 15.3%. Macroeconomic uncertainties continue to affect the mood of consumers and companies, but inventories have in the meantime reached a normal level. From the ordering behavior, we can see the first positive, albeit weak, signals, and that supports our estimation that a slight recovery in the second half of fiscal 2025 can be expected.

Speaker Change: First fields of application of CSS were affected by this development.

Speaker Change: That illustrates the lasting weakness looks like in humans, the Iot market.

Speaker Change: Cause I'll say drop in revenues. The second results declined it was 13 million euros, that's getting resolved marching was eight 7% and then previous quarter. It was at 15, 3%.

Speaker Change: [noise] macroeconomic uncertainties continue to affect the mood of consumers and companies thought inventories that have in the meantime reached normal level.

Jochen Hanebeck: Macroeconomic uncertainties continue to affect the mood of consumers and companies, but inventories have, in the meantime, reached a normal level. From the ordering behavior, we can see the first positive, albeit weak signals, and that supports our estimation that a slight recovery in the second half of fiscal 2025 can be expected. With innovations, we are preparing continuously for growth. Recently we introduced a new family of microcontrollers for industrial applications. The PSoC microcontrollers enable highly efficient and secure motor control and energy conversion systems. These systems can be found in a large number of applications, including domestic appliances, industrial drives, robots, electric vehicles, and solar plants. In addition, security is becoming more and more an important factor. Working together with the Federal Office for Information Security, we have set a milestone on the way to quantum-resistant world.

Speaker Change: From the ordering behavior, we can see the first positive it will be at the weak signals and that supports our estimations that a slight recovery in the second half of fiscal 2025 can be expected.

Jochen Hanebeck: With innovations, we are preparing continuously for growth. Recently, we introduced a new family of microcontrollers for industrial applications. The PSoC microcontrollers. enable highly efficient and secure motor control and energy conversion systems and these systems can be found in a large number of applications including domestic appliances, industrial drives, robots and electric vehicles and solar plants. In addition... Security has become a more and more important factor. Working together with the Federal Office for Security and Information Technology, we have set a milestone on the way to quantum-resistant worlds. We're the first company to have achieved the Commonocratic EAL6.

Speaker Change: With innovations we are preparing continuously for growth recently, we introduced.

Speaker Change: Introducing new family of Viacom curves for industrial applications the pizza.

Speaker Change: Microcontrollers.

Speaker Change: In April a highly efficient and secure.

Speaker Change: <unk> took control and Denton XE conversion systems and these systems can be found in a large number of applications food and domestic appliances industrial drives robots and electric vehicles and solar plants and.

In addition.

Speaker Change: Security is becoming more and more important factor.

Speaker Change: Working together with a federal office for security and information technology, we have set a milestone in the on the way to quantum resistant world.

Jochen Hanebeck: We're the first company to have achieved the Common Criteria EAL6. This is a certification level for the implementation of a post-quantum cryptography algorithm in a security controller. The algorithm increases security of SIM and smart cards, ID cards, pay cards, e-health cards, and these are protected against threats from high performance quantum computers. Ladies and gentlemen, I come to the outlook. The first three months of our fiscal year 2025 are behind us, and the target market is developing as we expected in November. The reduction in inventories is continuing, especially in the field of automotive and industrial applications. The corrections are slowing down, however. In many markets close to consumers, the levels of inventories have reached normal levels in the meantime. A precise prediction is difficult regarding the further development of the cycle.

We're the first company to have cheap they come on attracting are six.

Jochen Hanebeck: This is a certification level for the implementation of a post-quantum cryptography algorithm in a security controller. The algorithm increases security of SIM and smart cards, ID cards, pay cards, eHealth cards, and These are protected against threats from high-performance quantum computers.

Speaker Change: This is a certification level for the amortization of our posts quantum cryptography algorithm in our security controller.

Speaker Change: Some reason increases security of same on smart cards.

Speaker Change: I'd cards pay cons ehealth cards and.

Speaker Change: These are protected against threats from high performance quantum computers.

Jochen Hanebeck: Ladies and gentlemen, I come to the outlook. The first three months of our fiscal year 2025 are behind us and the target market is developing as we expect in November. The reduction in inventories is continuing, especially in the field of automotive and industrial applications. The corrections are slowing down, however. In many markets close to consumers, the levels of inventories have reached normal levels in the meantime. A precise prediction is difficult regarding the furtherment of the cycle. There are some indications that demand is picking up again, but until it becomes stronger, we can expect a slight recovery, not a strong upswing.

Speaker Change: Ladies and gentlemen, I come to the outlook. The first three months of our fiscal year 'twenty to 'twenty five all behind us and they're talking lots of development as we expected in November.

Speaker Change: The reduction in inventories is continuing especially in the field of automotive and industrial applications. The corrections are slowing down however in money market is closer gum in humans the levels of inventories have reached normal levels in the meantime.

Speaker Change: A precise prediction is difficult regardless of the cycle. There are some indications that demand is picking up again, but until it becomes stronger we kind of expect a slight recovery not a strong upswing. The early indicators for our business will be observed very closely were taken to a different scenarios.

Jochen Hanebeck: There are some indications that demand is picking up again, but until it becomes stronger, we can only expect a slight recovery, not a strong upswing. The early indicators for our business will be observed very closely. We'll take into different scenarios and we shall prepare for them. An outstanding example of such a scenario is the escalating trade conflict with tariffs and counter tariffs, which was announced by the USA at the weekend to apply to Mexico, Canada, and China. Whereas the direct effects on of these tariffs on our supply chain will be limited. We'll have to take into account the indirect effects of trade conflicts on customer demand.

Jochen Hanebeck: The early indicators for our business will be observed very closely. We'll take into account different scenarios, and we shall prepare for them.

Speaker Change: And we shall prepare for them.

Speaker Change: Uh huh.

Jochen Hanebeck: Now a stunning example of such a scenario is the escalating trade conflict. with tariffs and counter tariffs. which was announced by the USA at the weekend to apply to Mexico, Canada and China. with the direct effects of these tariffs on... Our supply chain will be limited, but we'll have to take an account. the indirect effects of trade conflicts on customer demand in the second quarter of its expected revenue of 3.6 billion Euros, which is based on an exchange rate of the US dollar to the euro of 1.05. when it had been 1.10 beforehand. In the forecast revenue, the second result margin should be in the mid-teens.

Speaker Change: That Sunday example of such a scenario is the escalating trade conflict.

Speaker Change: With tariffs and counter tariffs.

Speaker Change: Which was announced by the USA at the weekend.

Speaker Change: Applied to Mexico kind of in China.

Speaker Change: Whereas the direct effects on Oh, if these tariffs on.

Speaker Change: Our supply chain.

Speaker Change: Well it will be limited, but we'll have to take into account.

Speaker Change: The indirect effects of trade plum creek's on customer demand.

Jochen Hanebeck: In Q2, we expect revenue of EUR 3.6 billion, which is based on an exchange rate of the US dollar to euro of 1.05 when it had been 1.10 beforehand. In the forecast revenue, the second result margin should be in the mid-teens %. Volume increases are having a positive effect, but the fact that the one-off payment in Q1 of compensation will not reoccur means that this will balance out by price adjustments at the beginning of the year. For fiscal 2025 as a whole, we expect a slight increase in revenue, and in November in our guidance where there's been a slight decline. The increase in our forecast is due to the stronger US dollar than expected.

Speaker Change: In the second quarter base revenue of $3 6 billion euros, which is based on an exchange or if the U S dollar to euro of 1.15.

Speaker Change: When it had been one point 10 beforehand.

Speaker Change: And so your forecast revenue the segment result margin should be in the mid teens.

Speaker Change: Ascent.

Jochen Hanebeck: Volume increases are having a positive effect, but the fact that the one-off payment of compensation in the first quarter will not recur means that there will be an also... this week. a slight increase in revenue, and in November, in our guidance, we had a slight decline. The increase in our forecast is due to the stronger U.S. dollar than expected. The adjustment and the better exchange rate in the first quarter means that revenue expectations has been increased to €450 million. Our forecast on Fin's profitability in FY2025 remains unchanged. The second result margin should be in the mid to high teens and the stronger USD means that the stronger it is, the more likely you are to be at the upper end of that range.

Speaker Change: Volume increases are having a positive effect, but the fact.

Speaker Change: The fact that the one off payment of compensation in the first quarter World Cup means that there'll be no horses.

Yeah.

Speaker Change: This rebound in the side by price adjustments at the beginning yeah full fiscal 'twenty five as a whole we expect.

Speaker Change: A slightly a slight increase in revenue and didn't November and I got this right. It's about a slight decline the increase in our forecast is due to the stronger U S dollar than I expected the adjustment and the peso exchange rates in the first quarter means that our revenue expectations has been increased.

Jochen Hanebeck: The adjustment and the better exchange rate in Q1 means that revenue expectations has been increased to EUR 450 million. Our forecast on Infineon's profitability in fiscal 2025 remains unchanged. The segment result margin should be in the mid to high teens, and the stronger US dollar means that the stronger it is, the more likely you are to be at the upper end of that range. In the meantime, we are making considerable efforts to strengthen our profitability structurally. We're very happy with the progress made with the Step Up initiative, and in the course of the present fiscal year, we achieved the first results. As of fiscal 2026, we then expect a greater effect on the segment result margin.

Speaker Change: 450 million euros.

Speaker Change: The forecast on the independence profitability in fiscal 'twenty to 'twenty five remains unchanged. The segment result margin should be in the mid to high teens and of a stronger U S. Thorough means that there's some of it is the more likely you ought to be at the upper end of that range in the meantime, we are making considerable efforts to strengthen.

Jochen Hanebeck: In the meantime, we are making considerable efforts to strengthen our profitability structurally. We are very happy with the progress made with the step-up initiative and the course of the present fiscal year, we should achieve the first results. As of fiscal 2026, we then expect a greater effect on the second result margin. As of 2027, we should then feel the full effect, which will be in the high three-figure million euro range.

Speaker Change: Our profitability structurally.

Speaker Change: We're very happy with the progress made to the step up initiative and of course, the present fiscal year, we achieved the first yourselves as our fiscal 2026 with unexpected greater effect on the second part soft marching as our 20th twenty-seven. We shouldn't then feel the full effect, which will be in the high three figure million Euro range.

Jochen Hanebeck: As of 2027, we should then feel the full effect, which will be in the high three-figure million EUR range. Investment volume in the current fiscal year remains unchanged at about EUR 2.5 billion. Investments in large front-end buildings. Adjusted for that, we expect a free cash flow of EUR 1.27 billion. For the reported free cash flow, we expect about EUR 900 million. Ladies and gentlemen, before we start the question and answer session, I just draw attention to the fact that on 20 February, the virtual AGM of Infineon will take place. The information will be found at the website at infineon.com/agm. That brings me to the end of my remarks and together with Sven Schneider I'd now be happy to take your questions.

Jochen Hanebeck: investment volume in the current fiscal year were a bit unchanged at about 2.5 billion euros. Investments in large front-end buildings. adjusted the for that we expect a free cash flow of 1.27 billion euros for the reported free cash flow we expect about 900 million euros Ladies and gentlemen, before we start the question and answer session, George has said that on the 20th of February, the virtual AGM in Finn will take place. The information will be found at the website at in Finneon. dot com slash HV.

Speaker Change: Investment volume in the current fiscal year over I mean, it's unchanged at about $2 5 billion euros.

Speaker Change: Investments in large.

Speaker Change: And buildings.

Speaker Change: Austin.

Speaker Change: So that we expect our free cash flow of one point to seven 1 billion euros for the reported free cash flow, we expect about 900 million euros.

Speaker Change: Before we start the question answer session.

Speaker Change: Georgetown fact that the 20th February the virtual AGM of Infineon will take place the information to be found.

Speaker Change: On the web.

Speaker Change: Website at it.

Speaker Change: Infineon.

Speaker Change: Dot com slash a tree.

Operator: That brings me to the end of my remarks and together so it's finished. I'd be happy to take your questions. If you want to withdraw your question, please press start. I request Please use their handset when asking a question. Please press star 1 to ask a question.

Speaker Change: And that brings me to the end of my remarks, and together. So it's finished I thought not be happy to take your questions. Ladies and gentlemen, we are now going to start the Q&A session. If you'd like to ask a question. Please press star one on your keypad.

Operator 2: Ladies and gentlemen, we are now going to start the Q&A session. If you'd like to ask a question, please press star one on your keypad.

Operator: Ladies and gentlemen, we are now going to start the Q&A session. If you'd like to ask a question, please press star one on your keypad. You will hear a tone. This will confirm that you have been added to the waiting list. If you want to withdraw your question, please press star two. The participants are requested to use their handset when asking a question. Please press star one to ask a question. The first question comes from Joachim Hofer from Handelsblatt. Please go ahead.

Florian Martens: You will hear a tone. This will confirm that you have been added to the waiting list. If you want to withdraw your question, please press star two. The participants are requested to use their handset when asking a question. Please press star one to ask a question. The first question comes from Joachim Hofer from Handelsblatt. Please go ahead. Good morning, everybody. Can you hear me? Yes, we can very well, Mr. Hofer. Good morning. Thank you very much. Wonderful. I have a question. If I understood you correctly, there will be no direct effects of the trade tariff war. If there is a weakness in the economy, and I also assume that the chips will be built in Europe, in Malaysia, maybe they'll be packaged there.

Speaker Change: You will hear a tone.

Speaker Change: This will confirm that you have been added to the waiting list. If you want to withdraw your question. Please press star two.

Speaker Change: The participants are requested.

Speaker Change: To use their handset when asking a question. Please press star one to ask a question. The first question comes from Joachim Hoofer from hundreds Blair. Please go ahead. Good morning, everybody can you hear me.

Joachim Höfer: The first question comes from Joachim Höfer from Hanselsblatt. Please go ahead. Good morning, everybody. Can you hear me? Yes, we can. Very well, Mr. Hoover. Good morning. Thank you very much. Wonderful.

Joachim Hofer: Good morning, everybody. Can you hear me?

Jochen Hanebeck: Yes, we can very well, Mr. Hofer. Good morning.

Speaker Change: Yes, we can very well Mr who is a good morning. Thank you very much wonderful I have a question if I understood you correctly there'll be no direct effects of the trade tariff war.

Joachim Hofer: Thank you very much. Wonderful. I have a question. If I understood you correctly, there will be no direct effects of the trade tariff war. If there is a weakness in the economy, and I also assume that the chips will be built in Europe, in Malaysia, maybe they'll be packaged there. This seems to be quite a complex procedure that is quite difficult to predict depending on who has to pay what tariffs where. Is that roughly accurate? Thank you very much.

Jochen Hanebeck: I have a question. If I understood you correctly, there will be no direct effects of the trade tariff war. If there is a... Weakness in the economy And I also assume that the chips will be built in Europe, in Malaysia, maybe they'll be packaged there. This seems to be quite a complex procedure that is quite difficult to predict depending on who has to pay what tariffs where. Is that roughly accurate? Thank you very much.

Speaker Change: And if there is a.

Speaker Change: Weakness in the economy.

Speaker Change: And I also assume that the chips will be built in Europe, and Malaysia, maybe there'll be packaged their this seems to be quite a complex procedure that is quite difficult to predict depending on who has to pay what tariffs where is.

Florian Martens: This seems to be quite a complex procedure that is quite difficult to predict depending on who has to pay what tariffs where. Is that roughly accurate? Thank you very much. Well, you started with the second question first. You're absolutely right. The devil is in the detail, if you will. It will greatly depend at what level the value-added chain will see tariffs. Will it be at the chip stage, the packaged chip stage, or the system stage? This is what makes everything so complex and difficult to make sweeping predictions or to give simple answers to a question like this. With respect to the tariffs that have actually been announced, some of which have been stayed for the time being in North America, relating to Mexico and Canada.

Speaker Change: Is that roughly accurate thank you very much.

Jochen Hanebeck: Well, you started with the second question first. You're absolutely right. The devil is in the detail, if you will. It will greatly depend at what level the value-added chain will see tariffs. Will it be at the chip stage, the packaged chip stage, or the system stage? This is what makes everything so complex and difficult to make sweeping predictions or to give simple answers to a question like this. With respect to the tariffs that have actually been announced, some of which have been stayed for the time being in North America, relating to Mexico and Canada.

Speaker Change: Yeah.

Jochen Hanebeck: well You started with the second, I'll start with the second question first. You're absolutely right. The devil is in the detail, if you will. It will greatly depend at what level the... value-added chain will see tariffs? Will it be the chip stage, the packaged chip stage, or the system stage? This is what makes everything so complex and difficult to make sweeping predictions or to give simple answers to a question like this. the tariffs that have actually been announced, some of which have been stayed for the time being in North America, relating to Mexico and Canada.

Speaker Change: Well.

Speaker Change: You started with the I'll start with the second question first you're absolutely right. The Devil is in the detail. If you will it will greatly depend at what level the.

Speaker Change: Value added chain will see tariffs will it be at the chip stage, the packaged chip stage or the system stage. This is what makes everything so complex and difficult to make seeping predictions or to give simple answers to a question like this with respect to.

Speaker Change: Two.

Speaker Change: The tariffs that have actually been announced and.

Speaker Change: Some of which have been stayed for the time being in North America are.

Speaker Change: Relating to Mexico and Canada.

Jochen Hanebeck: It is safe to say that this will not have or would not have had a direct impact or the impact would have been negligible, but we must assume that vehicles in the United States will become more... and therefore that sales volumes will drop, and this would then have a knock-on effect on Infineon via the revenue that we generate in North America in the automotive segment. and it would affect their market share.

Florian Martens: It is safe to say that this will not have or would not have had a direct impact, or the impact would have been negligible. We must assume that vehicles in the United States will become more expensive and therefore that sales volumes will drop. This would then have a knock-on effect on Infineon via the revenue that we generate in North America in the automotive segment. It would affect our market share. I have a second question. I would also like to know what this means. You mentioned compensatory payments at PSS. What does that actually mean? Mr. Schneider will be happy to answer that question. Mr. Schneider? Yes. Good morning, Mr. Hofer. This is Mr. Schneider now.

Jochen Hanebeck: It is safe to say that this will not have or would not have had a direct impact, or the impact would have been negligible. We must assume that vehicles in the United States will become more expensive and therefore that sales volumes will drop. This would then have a knock-on effect on Infineon via the revenue that we generate in North America in the automotive segment. It would affect our market share. I have a second question. I would also like to know what this means. You mentioned compensatory payments at PSS. What does that actually mean? Mr. Schneider will be happy to answer that question. Mr. Schneider?

Speaker Change: It is safe to say that this will not have or would not have had a direct impact or the impact would have been negligible, but we must assume that vehicles in the United States will become more.

Speaker Change: Expensive and therefore that sales volumes will drop and this would then have a knock on effect on infineon via the revenue that we generate in North America in the automotive segment.

Speaker Change: And it would affect our market share I have a second question I would also like to know what this means you've mentioned compensatory payments at pay U S. P. S. S. What does that actually mean, Mr. Schneider would be happy to answer that question. Mr. Snyder, Yes. Good morning, Mr. Over this Mr. Schneider now we have the customer order with a major client.

Joachim Höfer: I have a second question. I would also like to know what this means. You mentioned compensatory payments at PSS. What does that actually mean?

Dr. Sven Schneider: Mr. Schneider would be happy to answer that question.

Dr. Sven Schneider: Mr. Schneider? Yes, good morning, Mr. Hofer. This is Mr. Schneider now. We have a customer order with a major client. where specific investments and expenditures were incurred and the customer canceled this order, which of course is legally permissible. The contract envisaged that in such an event, we would receive a compensatory payment from the customer in the mid-double-digit range. And we appropriated that compensatory payment in the first quarter, and it will be reflected in cash flow in the second quarter.

Sven Schneider: Yes. Good morning, Mr. Hofer. This is Mr. Schneider now. We have a customer order with a major client, where specific investments and expenditures were incurred, and the customer canceled this order, which of course is legally permissible. The contract envisaged that in such an event, we would receive a compensatory payment from the customer in the mid-double-digit range, and we appropriated that compensatory payment in Q1, and it will be reflected in cash flow in Q2.

Florian Martens: We have a customer order with a major client, where specific investments and expenditures were incurred, and the customer canceled this order, which of course is legally permissible. The contract envisaged that in such an event, we would receive a compensatory payment from the customer in the mid-double-digit range, and we appropriated that compensatory payment in Q1, and it will be reflected in cash flow in Q2. Thank you very much. The next question comes from the reporter from Thomson Reuters, Mr. Hakan Ersen. I'm asking a question with respect to your elevated forecast with the business in semiconductors for data centers. Is the ascent of DeepSeek playing a role here? And if so, what influence does this have on your business expectedly?

Speaker Change: Whereas specific investments and expenditures were incurred and the customer cancelled disorder, which of course is legally permissible the contract envisaged that infection event, we would receive a compensatory payment from the customer in the.

Speaker Change: Mid double digit range, and we appropriated VAT compensatory payment in the first quarter and it will be reflected in cash flow in the second quarter. Thank you very much.

Joachim Hofer: Thank you very much.

Joachim Höfer: Thank you very much.

Operator: The next question comes from the reporter from Thomson Reuters, Mr. Hakan Ersen.

Hakan Ersen: The next question comes from the reporter from Thomson Reuters, Mr. Hakan Ersen. I'm asking a question with respect to your elevated forecast with the business in semiconductors for data centers. Is the ascent of DeepSeek playing a role here? And if so, what influence does this have on your business, expectedly? Similarly to DeepSeek, very low-cost AIs enter the market that use much less computing power than ChatGPT and the others that are already on the market.

Speaker Change: The next question comes from.

Speaker Change: The reported from Thomson Reuters, Mr. How kind of asking I'm asking a question with respect to your elevated forecast with the business in semiconductors for data centers.

Hakan Ersen: I'm asking a question with respect to your elevated forecast with the business in semiconductors for data centers. Is the ascent of DeepSeek playing a role here? And if so, what influence does this have on your business expectedly? Similarly to DeepSeek, very low-cost AIs enter the market that use much less computing power than ChatGPT and the others that are already on the market.

Speaker Change: Okay.

Speaker Change: The ascent of deep seek playing a role here and if so.

Speaker Change: What influence does this have on.

Speaker Change: Your business expectedly.

Speaker Change: It's simple.

Florian Martens: Similarly to DeepSeek, very low-cost AIs enter the market that use much less computing power than ChatGPT and the others that are already on the market. Thank you, Mr. Ersen, for the question. Mr. Hanebeck here now. In the interim, we have achieved a very strong position with respect to power semiconductor solutions. We're talking about controllers and the like, as with all relevant GPU manufacturers and operators who develop their own GPU chips and deploy them. Therefore, we are in a very good position in this respect. With respect to DeepSeek, on the one hand, of course, this is a great piece of progress, where more efficient models are now appearing on the market, in the dissemination of simpler models.

Speaker Change: Simply similarly to deep seek a very low cost a eyes enter the market that use much less computing power than chat G. P T and the others that are already on the market.

Jochen Hanebeck: Thank you, Mr. Ersen, for the question. Mr. Hanebeck here now. In the interim, we have achieved a very strong position with respect to power semiconductor solutions. We're talking about controllers and the like, as with all relevant GPU manufacturers and operators who develop their own GPU chips and deploy them. Therefore, we are in a very good position in this respect. With respect to DeepSeek, on the one hand, of course, this is a great piece of progress, where more efficient models are now appearing on the market, in the dissemination of simpler models.

Jochen Hanebeck: Thank you, Mr. Ehrson, for the question, Mr. Hanebeck here now. In the interim, we have achieved a very strong position with respect to power semiconductor solutions. We're talking about controllers and the like, as with all relevant GPU manufacturers and operators who develop their own GPU chips and deploy them. Therefore, we are in a very good position in this respect with respect to DeepSea. On the one hand, of course, This is a great piece of progress, where more efficient models are now appearing on the market. In the dissemination of simpler models, this should have an effect, but it is also to be expected that in the next...

Speaker Change: Thank you Mr asking for the question.

Speaker Change: Mr. Han it back here now.

Speaker Change: The interim we have achieved a very strong position with respect to.

Speaker Change: Power semiconductor solutions, we're talking.

Speaker Change: About controllers.

Speaker Change: And the like.

Speaker Change: As with all relevant GPU manufacturers and operators, who develop their own GPU chips and deployed them.

Speaker Change: Therefore, we are in a very good position in this respect with respect to deep seek.

Speaker Change: On the one hand.

Speaker Change: Of course.

Speaker Change: This is a great piece of progress.

Speaker Change: We're more efficient models are now appearing on the market.

Speaker Change: In the defense dissemination of simpler models, we should have an effect, but it is also to be expected that in the next.

Florian Martens: This should have an effect, but it is also to be expected that in the next leading major models, a performance jump, will be made. Now, perhaps this may slow down infrastructure expansion. On the other hand, if model costs drop, usage may well increase, and therefore, in turn, demands on infrastructure, may be accelerated. This will remain very dynamic, especially given the fact that it's not just this effect, via models that, has to be factored in, but as you could see very well at CES, we have this in the cloud and in the edge, in microcontrollers, in our microcontrollers for automobiles and industrial applications, but that there's a new class of on-premise AI, such as, PCs, the type of which were presented at the CES. This, of course, will also shift, the markets.

Jochen Hanebeck: This should have an effect, but it is also to be expected that in the next leading major models, a performance jump, will be made. Now, perhaps this may slow down infrastructure expansion. On the other hand, if model costs drop, usage may well increase, and therefore, in turn, demands on infrastructure, may be accelerated. This will remain very dynamic, especially given the fact that it's not just this effect, via models that, has to be factored in, but as you could see very well at CES, we have this in the cloud and in the edge, in microcontrollers, in our microcontrollers for automobiles and industrial applications, but that there's a new class of on-premise AI, such as, PCs, the type of which were presented at the CES.

Speaker Change: Leading major models a performance jump will be made now perhaps this may slow down.

Jochen Hanebeck: leading major models, a performance jump will be made. Now, perhaps this may slow down infrastructure expansion. On the other hand, If model costs drop. usage may well increase. and, therefore, in turn, Demands on Infrastructure may be accelerated.

Speaker Change: Infrastructure expansion on the other hand.

Speaker Change: If model costs drop.

Speaker Change: Usage may well increase.

Speaker Change: And therefore in turn.

Speaker Change: Demands on infrastructure.

Speaker Change: Maybe accelerated.

Speaker Change: This will remain very dynamic, especially given the fact that it's not just this effect.

Jochen Hanebeck: this will remain very dynamic, especially given the fact that it's not just this effect via models that has to be factored in, but as you could see very well at CS, we have this in the cloud and in the edge in microcontrollers, in our microcontrollers for automobiles and industrial applications, but that there's a new class of on-premise AI such as PCs, the type of which were presented at the CS, and this of course will also shift the markets. So we will continue to see a very dynamic environment. This is not going to be a linear movement, but the fundamental trend.

Speaker Change: Via models that has to be factored in but as you could see very well at C. S.

Speaker Change: We have this in the cloud and the edge in Microcontrollers and our Microcontrollers for automobiles and industrial applications, but that there is a new class of on premise a eye such as a P. CS the type of which we are present.

Speaker Change: The C S and this of course will also shift.

Jochen Hanebeck: This, of course, will also shift, the markets. We will continue to see a very dynamic environment. This is not going to be a linear movement, but the fundamental trend actually plays into our cards, especially with respect to power supply solutions.

Speaker Change: The markets. So we will continue to see a very dynamic environment.

Florian Martens: We will continue to see a very dynamic environment. This is not going to be a linear movement, but the fundamental trend actually plays into our cards, especially with respect to power supply solutions. Thank you very much, says Mr. Ersen. Just a reminder, if you want to ask a question, please press star one on your keypad. The next question comes from Christina Kyriasoglou from Bloomberg News. Yes. Hello. Can you hear me? Yes, very well. Thank you very much. Now, this is quite an exciting new tool here. I'd be interested to know whether you can say why you believe you are faring better than the competition, because they have been rather disappointing with respect to their outlooks in the last days and weeks. Yes. Hanebeck here. This is a very good question, and I'd be happy to answer that for you.

Yeah.

Speaker Change: This is not going to be a linear movement, but the fundamental trend.

Jochen Hanebeck: actually plays into our cards, especially with respect to power supply solutions.

Speaker Change: Actually plays into our cards, especially with respect to power supply solutions.

Hakan Ersen: Thank you very much, says Mr. Ersen.

Operator: Thank you very much, says Mr. S.

Speaker Change: Thank you very much says Mr.

Operator: Just a reminder, if you want to ask a question, please press star one on your keypad. The next question comes from Christina Kyriasoglou from Bloomberg News.

Speaker Change: Catherine.

Operator: Just a reminder, if you want to ask a question, please press star 1 on your keypad.

Speaker Change: Just a reminder, if you ask a question. Please press star one on your keypad.

Christina Kiriasiolugo: The next question comes from Christina Kiriasiolugo from Bloomberg News. Yes, hello. Can you hear me? Yes, very well. Thank you very much.

Speaker Change: The next question comes from Kristina curious your Lugo from Bloomberg News, Yes, Hello can you hear me, yes, very well thank you very much.

Christina Kyriasoglou: Yes. Hello. Can you hear me? Yes, very well. Thank you very much. Now, this is quite an exciting new tool here. I'd be interested to know whether you can say why you believe you are faring better than the competition, because they have been rather disappointing with respect to their outlooks in the last days and weeks.

Jochen Hanebeck: This is quite an exciting new tool here. I'd be interested to know whether you can say why you believe you are faring better than the competition, because they have been rather disappointing. with respect to their outlooks in the last days and weeks.

Speaker Change: Yeah. This is quite an exciting new tool here.

Speaker Change: I'd be interested to know whether you can say why you believe you are faring better than the competition because they have been rather disappointing.

Speaker Change: With respect to their outlooks in the last days and weeks.

Jochen Hanebeck: Yes. Hanebeck here. This is a very good question, and I'd be happy to answer that for you. There are three factors that I can offer up to you, which then you perhaps can apply to the individual competitors yourself. First, we have seen especially strong growth drivers such as AI that we just spoke about. Second, we're talking about market share here. Last year, in the spring, we conducted a debate around having gained wonderful market share in automotive microcontrollers, whereas others, perhaps in general, in the general microcontroller sector, lost market share compared to the competitors. There are other effects. If you focus too much and rely too much on key accounts, then of course they can have a stronger effect on revenue trends, whereas here at Infineon, we have a very broad customer portfolio.

Jochen Hanebeck: Yes, Hanebeck here, this is a very good question and I'd be happy to answer that for you. There are three factors that I can offer up to you which then you perhaps can apply to the individual competitors yourself. We have seen especially strong growth drivers, such as AI that we just spoke about. Second. We're talking about market share here. Last year. In the spring, we conducted a debate around having gained wonderful market share in automotive microcontrollers whereas others perhaps in general in the general microcontroller sector lost market share. If you focus too much and rely too much on the key accounts then of course they can have a stronger effect on revenue trends whereas here at Infineon we have a very broad customer portfolio.

Speaker Change: Yes.

Speaker Change: Got it back here. This is a very good question and I'd be happy to answer that for you. There are three factors that I can offer up to you.

Florian Martens: There are three factors that I can offer up to you, which then you perhaps can apply to the individual competitors yourself. First, we have seen especially strong growth drivers such as AI that we just spoke about. Second, we're talking about market share here. Last year, in the spring, we conducted a debate around having gained wonderful market share in automotive microcontrollers, whereas others, perhaps in general, in the general microcontroller sector, lost market share compared to the competitors. There are other effects. If you focus too much and rely too much on key accounts, then of course they can have a stronger effect on revenue trends, whereas here at Infineon, we have a very broad customer portfolio.

Speaker Change: Which then you perhaps can apply to the individual competitors yourself.

Speaker Change: First.

Speaker Change: We have seen especially strong growth drivers such as AI that we just spoke about second.

Speaker Change: We're talking about market share here last year.

Speaker Change: In the spring we conducted the debate around.

Speaker Change: Having gained wonderful marketshare in automotive microcontrollers, whereas others, perhaps in general in the general microcontroller sector.

Speaker Change: Lost market share.

Speaker Change: To the competitors and then there are other effects, if you focus too much and rely too much on our key accounts then of course, they can have a stronger effect on revenue trends, whereas here at Infineon, we have a very broad customer portfolio third and last.

Florian Martens: Third and last, in these times where the market is weaker, under certain circumstances, you may be tempted to offer customers more goods than they actually need. This isn't anything that we do, but we have observed this in the market. You can apply each of these factors to the competitors. What do you mean when you say that you supply more to the customer than they need? Well, says Mr. Hanebeck, you can offer customers maybe rebates so that they actually buy more product than they need. Okay. Thank you very much. The next question comes from dpa-AFX from Christoph Römer. Yes. Good morning. Christoph Römer from dpa-AFX. I wanted to maybe get some more specific information with respect to tariffs. Could you give us a ballpark, perhaps?

Jochen Hanebeck: Third and last, in these times where the market is weaker, under certain circumstances, you may be tempted to offer customers more goods than they actually need. This isn't anything that we do, but we have observed this in the market. You can apply each of these factors to the competitors.

Speaker Change: Yeah.

Jochen Hanebeck: in these times where the market is weaker. under certain circumstances, you may be tempted to offer customers more goods than they actually need. This isn't anything that we do, but we have observed this in the market. you can apply each of these factors to the competitors.

Speaker Change: In these times, where the market is weaker.

Speaker Change: Yeah.

Speaker Change: Under certain circumstances, you may be tempted to offer customers more goods than they actually need.

Speaker Change: This isn't anything that we do but we have observed this in the market.

Speaker Change: So.

Speaker Change: You can apply each of these factors to the competitors.

Christina Kyriasoglou: What do you mean when you say that you supply more to the customer than they need?

Speaker Change: Okay.

Jochen Hanebeck: What do you mean when you say that you supply more to the customer than they need? Well, says Mr. Hanevic, you can offer customers maybe... Rebates so that they actually buy more product than they need. Okay.

Speaker Change: What do you mean, when you say that you supply more to the customer then they need well says Mr. Han epic you can offer our customers a maybe.

Jochen Hanebeck: Well, says Mr. Hanebeck, you can offer customers maybe rebates so that they actually buy more product than they need.

Speaker Change: Rebates, so that they actually buy more product than they need okay. Thank you very much.

Christoph Römer: Thank you very much question comes from DPA AFX.

Christina Kyriasoglou: Okay. Thank you very much.

Operator: The next question comes from dpa-AFX from Christoph Römer.

Next.

Speaker Change: Question.

Speaker Change: Comes from D. P. A a FX.

Christoph Römer: And from Christoph Römer, yes, good morning. Christoph Römer from DPA, I wanted to... maybe get some more specific information with respect to tariffs. Could you give us a ballpark, perhaps? Should there actually be a trade war? How much demand is at risk? Would you be talking about something in a decimal range or would it be worse than that?

Speaker Change: From Crystal flu MA, yes, good morning.

Christoph Römer: Yes. Good morning. Christoph Römer from dpa-AFX. I wanted to maybe get some more specific information with respect to tariffs. Could you give us a ballpark, perhaps? Should there actually be a trade war, how much demand is at risk? Would you be talking about something in a decimal range, or would it be worse than that?

Christopher: Christopher rumor from D. P. A.

Speaker Change: I wanted to.

Speaker Change: Maybe get some more specific information with respect to tariffs could you give us a ballpark perhaps.

Florian Martens: Should there actually be a trade war, how much demand is at risk? Would you be talking about something in a decimal range, or would it be worse than that? Well, says Mr. Hanebeck, right now it would not be very responsible to throw some figures out there. It will depend greatly on the region, the percentage, the manner in which the tariffs are to take effect, et cetera. This can result in a big range from negligible to significant. I ask of your understanding that we would not like to make any other statements at this point because they'd be too speculative. I'm happy with that. Thank you very much. Says Mr. Römer. Ladies and gentlemen, that was the last question. I'd like to hand the floor to Mr. Hanebeck, please.

Speaker Change: Could there actually be a trade war.

Speaker Change: How much demand is at risk.

Speaker Change: No.

Speaker Change: Would you be talking about something in a decimal range or would it be worse than that well says Mr hand, it back right now it would not be very responsible to throw some figures out there it will depend greatly on the region the percentage.

Jochen Hanebeck: Well, says Mr. Hanebeck, right now it would not be very responsible to throw some figures out there. It will depend greatly on the region, the percentage, the manner in which the tariffs are to take effect, et cetera. This can result in a big range from negligible to significant. I ask of your understanding that we would not like to make any other statements at this point because they'd be too speculative. I'm happy with that.

Jochen Hanebeck: Well, says Mr. Hanebeck, right now it would not be very responsible to throw some figures out there. It will depend greatly on the region, the percentage, the manner in which the tariffs are to take effect, etc. This can result in a big range from negligible to significant, and I ask of your understanding that we would not like to make any other statements at this point because they'd be too speculative.

Speaker Change: The manner in which the tariffs are to take effect et cetera. This can result in a big range from negligible two significant and I ask for your understanding that we would not like to make any other statements at this point because they'd be too speculative I'm happy with that thank you very much.

Christoph Römer: I'm happy with that, thank you very much.

Christoph Römer: Thank you very much. Says Mr. Römer.

Speaker Change: She says.

Mr. Hu: Mr Hu on my own.

Operator: Mr. Rohrmeier. Ladies and gentlemen, that was the last question.

Operator: Ladies and gentlemen, that was the last question. I'd like to hand the floor to Mr. Hanebeck, please.

Speaker Change: Ladies and gentlemen that was the last question I'd like to hand, the floor to Mr. Hunter back please.

Jochen Hanebeck: I'd like to hand the floor to Mr. Hanebeck, please.

Mr. Hu: Yeah.

Jochen Hanebeck: Ladies and gentlemen, I'd like to sum up finally. The market environment remains weak, but Infineon's... Good, it's going well and the first quarter was slightly better than expected. The digestion of inventories within the automotive sector is continuing. strong momentum can be seen in power supply solutions for AI data centers. Also, the demand for electric vehicles with semiconductors in China has remained unbroken. Looking ahead, we can expect a slight recovery in the second half of the fiscal year. Because of the stronger dollar, we are increasing our forecast for 2025 compared to previous year, from stable to slightly increasing.

Mr. Hu: Ladies and gentlemen.

Jochen Hanebeck: Ladies and gentlemen, I'd like to sum up finally. The market environment remains weak, but Infineon is holding its ground well, and the Q1 was slightly better than expected. The digestion of inventories within the automotive sector is continuing. Strong momentum can be seen in power supply solutions for AI data centers. Also, the demand for electric vehicles with semiconductors in China remain unbroken. Looking ahead, we can anticipate a slight recovery in the second half of the fiscal year. Because of the stronger dollar, we're increasing our forecast for 2025 compared to previous year to, from stable to slightly increasing. In the current environment, we're concentrating on the factors that we can control: our cycle management, innovation, and the structural measures to improve our competitiveness. That is why how we are preparing for the upcoming upswing. Our long-term growth drivers are intact.

Mr. Hu: I'd like to sum up finally.

Mr. Hu: The market remains weak but in fitness.

Mr. Hu: Well described well in the first quarter was slightly better than expected the digestion of inventories within the automotive sector is continuing.

Mr. Hu: Most our momentum can be seen in past sponsorship for AI data center and also the demand for electric vehicles with a.

Mr. Hu: Semiconductors.

Mr. Hu: China's remained unbroken.

Mr. Hu: Looking ahead, we continue to separate a slight recovery in the second half of the fiscal year because of the stronger elevate we're increasing our forecast for turn to drive competitive revisit too from a stable to slightly.

Jochen Hanebeck: In the current environment, we are concentrating on the factors that we can control, our cycle management, investment, and the structural measures to improve our competitiveness. That is how we are preparing for the coming upsweep. Long-term growth drivers are in tact. Decomposition and digitalization contend to offer Infineon great opportunities for growth.

Mr. Hu: Increasing in the current environment concentrating on the factors that we can control and I'll talk to the management.

Mr. Hu: And the structural measures to improve our competitiveness that is how we are preparing for the upcoming upswing.

Mr. Hu: Our long term growth drivers are intact decompensation digitalization contingent for infineon, great opportunities for growth. Thank you for interest and goodbye.

Jochen Hanebeck: Decarbonization, digitalization continue to offer Infineon great opportunities for growth. Thank you for your interest, and goodbye.

Jochen Hanebeck: Thank you for your interest and goodbye.

Mr. Hu: Yeah.

Mr. Hu: Okay.

Mr. Hu: Yeah.

Mr. Hu: Okay.

Mr. Hu: Yeah.

Mr. Hu: Okay.

Mr. Hu: Yeah.

Mr. Hu: Okay.

Yeah.

Mr. Hu: Okay.

Mr. Hu: Yeah.

Mr. Hu: Yes.

Mr. Hu: Yeah.

Mr. Hu: Okay.

Mr. Hu: Yeah.

Mr. Hu: Okay.

Mr. Hu: Yeah.

Okay.

Q1 2025 Infineon Technologies AG Earnings Call - Press Conference

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