Q2 2025 Infineon Technologies AG Earnings Call - Press Conference

May 8, 2025

Operator: Gute Nacht.

Good luck.

Operator: Good morning and welcome to the conference call on the results of the second quarter of fiscal 2025. and YouTube.

Speaker Change: Good morning, and welcome to the conference call on the results of the second quarter of fiscal 2025.

Speaker Change: <unk> uses and I am your chorus call operator.

Operator: and I am your Chorus Call Operator. We'd like to point out that all participants... will be in listening status during the presentation and that the conference will be recorded. After the presentation, you will be afforded the opportunity to ask questions by pressing star 1 on your keypad. Should you need the help of an operator, please press star and 0. You may not record the conference call for your own purposes.

Speaker Change: We'd like to point out that all participants will.

Speaker Change: We'll be listening status during the presentation and that the conference will be recorded after the presentation, you'll be afforded the opportunity to ask questions by pressing star one on your keypad should you need the help of an operator, Please press star and zero you may not record the conference call for your own purposes.

Operator: I'd like to hand the floor to Mr. Martins now. Mr. Martins, the floor is yours.

Speaker Change: I'd like to hand support to Mr. Martins now Mr. Martin the floor is yours, good morning, ladies and gentlemen.

Jochen Hanebeck: Good morning, ladies and gentlemen. I would like to welcome you to our conference call on the results of the second quarter of fiscal 2025 of Infineon. Participating on behalf of the Board of Management of Infineon are Jochen Hanebeck, CEO, and Dr. Sven Schneider, CFO.

Florian Martens: Good morning, ladies and gentlemen. I would like to welcome you to our conference call on the results of Q2 of fiscal 2025 of Infineon. Participating on behalf of the Board of Management of Infineon are Jochen Hanebeck, CEO, and Dr. Sven Schneider, CFO. Listeners and participants, as usual, Mr. Hanebeck will start by giving you an overview of the business performance of Infineon. Following that, Mr. Hanebeck and Mr. Schneider will be available to answer any questions you may have. Our conference call will end punctually at 8:45AM as always. Of course, our press team around Andre Tauber and I myself will be available for any questions you may have afterwards. I'd like to hand the floor to Mr. Hanebeck now.

Martins: I would like to welcome you to our conference call on the results of the second quarter of fiscal 2025 of Infineon.

Speaker Change: Participating on behalf of the board of management of Infineon, Johan Hornbeck C O and Dr. Sven Schneider CFO.

Operator: Listeners and participants, as usual, Mr. Hanebeck will start by giving you an overview of the business performance of Infineon. Following that, Mr. Hanebeck and Mr. Schneider will be available to answer any questions you may have.

Speaker Change: Listeners and participants as usual Mr. Han epic will start by giving you an overview of the business performance of Infineon.

Following that Mr. Han at Beck and Mr. Schneider will be available to answer any questions. You may have our conference call will always win and punctually at 845 as always of course, our press team around under the Taliban and I myself will be available for any questions. You may have afterwards, and I'd like to hand, the floor to Mr. Han epic now.

Operator: Our conference call will end punctually at 8.45 as always.

Operator: Of course, our press team around Andre Tauber and I myself will be available for any questions you may have afterwards.

Jochen Hanebeck: And I'd like to hand the floor to Mr. Hanebeck now. Thank you, Florian. Morning and welcome.

Jochen Hanebeck: Thank you, Florian. Morning and welcome. Listeners, in Q2 of our fiscal year, Infineon has done well. Apart from the macroeconomic and geopolitical uncertainties, the business momentum is developing largely as we expected. Most of the target markets see customers and businesses finishing the digestion of their inventories, which is a major condition for a cyclical recovery. The conditions have changed since the last quarterly discussion. Tariff uncertainties are placing a burden on our final markets. They're not visible in the order books, but they have a negative influence on the demand in the course of the fiscal year as we consider probable. In the current environment, we at Infineon are concentrating on the factors that we can control.

Speaker Change: Thank you Florian good morning, and welcome.

Jochen Hanebeck: Listeners, in the second quarter of our fiscal year, Infineon has done well. Apart from the macroeconomic and jubilee uncertainties, the business momentum is developing largely as we expected. Most of our target market... see customers and businesses finishing the digestion of their inventories, which is a major condition for a cyclical recovery. but the conditions have changed since the last quarterly discussion. Tariff uncertainties are placing a burden on our final markets. They're not visible in the order books but they have a negative influence on the demand in the course of the fiscal year as we consider probable.

Speaker Change: In the second quarter of our fiscal year Infineon has done well.

Speaker Change: Apart from the macroeconomic and geopolitical uncertainties.

Speaker Change: The business momentum is just developing largely as we expected most of our target markets.

Speaker Change: C customers interpreters, finishing the digestion of the inventories, which is a major condition for a cyclical recovery.

But like conditions have changed since the last quarterly discussion Terry.

Speaker Change: Terry I finished Hudson Tees up placing a button on a final market, they're not visible in the order books, but do you have a negative balloons on the demand in the course of say fiscal year as we consider probable in the current environment. We at Infineon are concerned the factors. We can control we are preparing a flexibly.

Jochen Hanebeck: In the current environment, we at Infineon are concerned with the factors that we can control. We are preparing flexibly for short-term market changes, at the same time in the company working consistently on innovations and structure improvements in order to exploit the long-term opportunities available. In short, Infineon is being prepared for the further success.

Jochen Hanebeck: We are preparing flexibly for short-term market changes, at the same time in the company working consistently on innovations and structure improvements in order to exploit the long-term opportunities available. In short, Infineon is being prepared for the further success. Let's begin by looking back at the development of business in Q2 of the fiscal year, which ran as expected. Infineon achieved revenue of EUR 3,591 million, which is 5% up on the previous quarter. Positive revenue effects from the higher amounts sold were partially canceled out by annual price adjustments, as we had expected. Currency effects, on the other hand, played a subordinate role. The average actual exchange rate of the US dollar to the euro was 1.05, compared to 1.07 in the previous quarter.

Speaker Change: For short term market changes at the same time in the company working consistently on innovations and structure improvements in order to exploit the longtime.

Speaker Change: Opportunities available and short Infineon is being prepared for a further success let's.

Jochen Hanebeck: Let's begin by looking back at the development business in the second quarter of the fiscal year, which ran as expected. Infineon achieved revenue of €3,591,000,000, which is 5% up on the previous quarter. Positive revenue effects from higher amounts sold were partially cancelled out by annual price adjustments, as we had expected. Currency effects, on the other hand, played a subordinate role. The average actual exchange rate of the U.S. dollar to the euro was 1.05, compared to 1.07 in the previous quarter. The second result rose to 601 million euros, and the second margin remained stable at 16.7% compared to the previous quarter.

Speaker Change: Let's begin by looking back at the developed business in the second quarter of the fiscal year, which ran as expected.

Speaker Change: And fin achieved revenue of 3.591 billion euros, which is 5% up on the previous quarter positive revenue effects from the higher amounts sold well partially comes a lot by annual price adjustments as we had expected.

Speaker Change: Currency effects on the us and play the subordinate role the average actual exchange rate U S. Dollar to the Euro was 1.5 compared to one point out of seven in the previous quarter.

Jochen Hanebeck: The Segment Result rose to EUR 601 million, and the segment margin remained stable at 16.7% compared to the previous quarter. In the December quarter, there had been a compensation payment by a customer in the mid double-digit million figures, which supported the margin. The stable margin in the past quarter shows that we have been able to compensate for the annual price adjustments quite well. Our order backlog, consisting of confirmed and unconfirmed orders at the end of March, was around EUR 20 billion, which, despite the annual price adjustments and despite the negative currency effects, it remained constant at the reporting date. The free cash flow improved in Q2 to +EUR 174 million. In the previous quarter, it had been -EUR 237 million.

Speaker Change: The second result rose to 601 million euros in the second half margin remained stable at 16, 7% compared to the previous quarter and the December quarter, there had been a compensation payments by a customer and they made.

Jochen Hanebeck: In the December quarter, there had been a compensation payment by a customer in the mid-to-late quarter. Double-digit million figures which supported the margin. The stable margin in the past quarter shows that we have been able to compensate for the annual price adjustments quite well. Our order backlog consisting of confirmed and unconfirmed orders at the end of March was around 20 billion Euros, which despite the annual price adjustments and despite the negative currency effects, it remained constant at the reporting date. The free cash flow improved in the second quarter to plus 174 million Euros. In the previous quarter, it had been minus 237 million Euros.

Speaker Change: Double digit millions figures, which supports in the March and stable margin in the past quarter shows that we have been able to compensate for the annual price adjustments quite well.

Speaker Change: How order by slow consistent with confirmed and unconfirmed orders at the end of March was around 20 billion euros, which despite the annual price adjustments and despite the negative currency effects. It's remained constant at the reporting date, the free cash flow improved in the second quarter, two plus 174 million euros.

Speaker Change: In the previous quarter. It had been minus 237 million euros. The main reason for the higher free cash flow well reductions investments lower taxes, and the absence of the annual bonus payments, which are paid out in the December quarter.

Jochen Hanebeck: The main reason for the higher free cash flow were reductions in investments, lower taxes, and the absence of the annual bonus payments which were paid out in the December quarter.

Jochen Hanebeck: The main reason for the higher free cash flow were reductions in investments, lower taxes, and the absence of the annual bonus payments, which were paid out in the December Q1. Now, the results for the four divisions in Q2 of the fiscal year. The automotive segment achieved revenue of EUR 1,858 million, which is a healthy increase compared to the previous quarter, namely 6%. This development is also evidence that the inventories of the customers are being normalized. Please note that the business of our business line Sense and Control, which has been part of the automotive segment so far as of 01 January 2025, has been transferred to the Power and Sensor Systems division. The comparative periods have been adjusted accordingly.

Jochen Hanebeck: Now the results for the four divisions in the second quarter of the fiscal year. The automotive segment achieved revenue of €1,858,000,000, which is a healthy increase compared to the previous quarter, namely 6%. This is also evidence that the inventories of the customers are being normalized.

Speaker Change: Now as a result 44 divisions in the second quarter of the fiscal year the.

Speaker Change: The automotive segment achieved revenue of 1.858 billion euros, which is a healthy increase compared to the previous quarter, namely, 6% just about them. There's also evidence that the inventories at our customers have been normalized.

Jochen Hanebeck: And please note that the business of our business line sensor control, which has been part of the automotive segment so far as of the 1st of January 2025, has been transferred to the power and sensor systems division. The comparative periods have been adjusted accordingly. The second result of ATV rose to 385 million Euros and the second result margin was just 20.7%, following 19.6% in the previous quarter. Thanks to higher sales and an advantageous currency effect, we were able to balance out the negative effects of the annual price adjustment and a slight increase in idle costs.

Speaker Change: Please note that the business of a baseline sensor and control, which has been part of the automotive segment. So far after the first of January 2025 has been transferred to the power and sensor systems Division the comparative periods have been adjusted accordingly.

Jochen Hanebeck: The Segment Result of ATV rose to EUR 385 million, and the Segment Result Margin was +20.7%, following 19.6% in the previous quarter. Thanks to higher sales and an advantageous currency effect, we were able to balance out the negative effects of the annual price adjustment, a slight increase in idle costs. It's particularly encouraging that in the calendar year 2024, we were able to strengthen our global and regional market leadership in automotive semiconductors that could be seen from the latest figures from TechInsights. They show that in 2024, Infineon achieved a market share of 13.5% of the global market for automotive semiconductors, which means that we're not only the worldwide number one still, but we've also improved our position in all the major regions. In Europe, we're the new number one.

The second one is out of a T V rose to 385 million euros in the segment result margin, which was 27% following a 19, 6% in the previous quarter, thanks to higher sales and an advantageous currency effect, we're able to.

Speaker Change: Balance out the negative effects of the enterprise it jumps from the slight increase in idle costs, especially encouraged with the Kennedy of 'twenty 'twenty four we were able to strengthen our global and regional market leadership and ultra micro semiconductors that could be seen as the latest figures from tech insights. They showed that in 'twenty 'twenty, four and an infinite treat them all.

Jochen Hanebeck: Specifically in the calendar year 2024, we were able to strengthen our global and regional market leadership in Automotive Semiconductors. That can be seen from the latest figures from Tech Insights. They show that in 2024, Infineon achieved a market share of 13.5% of the global market for Automotive Semiconductors, which means that we are not only the worldwide number one still, but we have also improved our position in all the major regions. In Europe, we are the new number one. In North America, we have been able to advance from number three to number two. In China and Korea, we have maintained a clear leading position.

Speaker Change: We could show a 13, 5% of the global market of automotive semiconductors, which means not only thing what worldwide number one still but we've also improved our position in all the major regions in Europe with a new number one in North America, we have been able to advance from number three to number two.

Jochen Hanebeck: In North America, we have been able to advance from number three to number two. In China and Korea, we have maintained our clear leading position. In Japan, we've defended our position two successfully, which shows that we are in a good position in all our key regions. Behind these encouraging developments that we see our strong business in microcontrollers for the automotive industry. Our market share in these products has been extended to 32%, and also very encouraging is the fact that we're not just number one on the entire microcontroller market based on all the fields of applications. Now, the current situation. Whereas the most recent business developments slightly exceeded our original expectations, the geopolitical environment has become much more volatile in the past few weeks. The recently introduced US import tariffs will probably put the brakes on global vehicle production.

Speaker Change: In China, and Korea, we have maintained a clear leading position and in Japan. We've defended our position to successfully we show said we're in a good position in all our key regions.

Jochen Hanebeck: And in Japan, we have defended position two successfully, which shows that we are in a good position in all our key regions. Behind these encouraging developments, we see a strong business in microcontrollers for the automotive industry, and markets share in these products. has been extended to 32% and also very encouraging is the fact that we're not just number one on the entire microcontroller market based on all the fields of application.

Behind these encouraging developments that we see a strong business in microcontrollers, so the automotive industry and our market share in these products.

Speaker Change: The next 10 days to 32% and also very encouraging is the fact that we're not just number one.

Speaker Change: On the entire microcontroller market based on all the fields of applications.

Jochen Hanebeck: Now, the current situation... Whereas the most recent business developments exceeded original expectations, the geopolitical environment has become much more volatile in the past few weeks. The recently introduced U.S. import tariffs will probably put the brakes on global vehicle production. In response to that, market researchers at S&P Global have reduced their forecasts this year to about 88 million vehicles.

The current situations.

Speaker Change: Whereas the most recent business relevant to start exceeded our original expectations. The geopolitical environment has become much more volatile in the past few weeks. The recently introduced U S import tariffs.

Speaker Change: Probably put the brakes on global vehicle production in response to that market researches at S&P global have reduced their forecast for this year.

Jochen Hanebeck: In response to that, market researchers at S&P Global have reduced their forecast this year to about 88 million vehicles. At the same time, with our solutions, we are very successful with our customers, and I'll give you three current examples. Firstly, a European premium manufacturer has selected our AURIX and TRAVEO microcontrollers for its leading vehicle platforms. The platform has a life cycle until well into the 2030s. With our microcontroller solutions alone, we achieve semiconductor revenue of several hundred EUR per vehicle on average on this platform. Secondly, our latest AURIX TC4x microcontrollers is going to be used in the next generation of a leading vehicle platform for autonomous driving. The combination makes particularly fast, reliable, and secure calculation operations in driver assistance systems. Thirdly, in the field of battery management systems, we've also achieved a leading milestone.

Speaker Change: To about 88 million vehicles.

Jochen Hanebeck: At the same time, with our solutions, we are very successful with our customers, and I'll give you three current examples. Firstly, a European pre-manufacturer has selected our Aurex and Travio microcontrollers for its leading vehicle platforms. The platform has a life cycle until well into the 2030s. With our microcontroller solutions alone, we achieve semiconductor revenue of several hundred euros per vehicle on average on this platform. Secondly, our latest Oryx TC4 microcontrollers. is going to be used in the next generation of leading vehicle platform for autonomous driving. The combination makes particularly fast, reliable and secure. Calculation Operations in Driver Assistance Systems. Thirdly, in the field of battery management systems, we've also achieved a leading milestone.

Speaker Change: At the same time without solutions, we are very successful with our customers and I'll give you three current examples firstly.

Speaker Change: Our European pre manufacturer has selected our oryx and trivia microcontrollers for its leading vehicle platforms.

The platform has a lifecycle until well into the 23rd is.

Speaker Change: With our Micros Carlist controller solutions alone, we achieved semiconductor revenue several hundred euros per vehicle on average on this platform secondly, our latest or X T C for Microcontrollers.

Speaker Change: It's going to be used in their late next generation of our leading vehicle platform for autonomous driving the combination makes particularly fast reliable and secure.

Speaker Change: Okay.

Calculation operations and driver assistance systems, so that didn't fail of battery management systems is also achieved the leading milestone a leading Chinese electric vehicle manufacture has decided didn't favor a new ATM channel battery management system.

Jochen Hanebeck: A leading Chinese electric vehicle manufacturer has decided in favor of our new 18-channel battery management system, which means that we've achieved the first design win with this solution. The further development of the existing 12 channels design makes more compact systems possible, which is particularly important for the coming 800V battery systems. With this innovation, we are setting a new standard in the industry for ultra-precise sensors and smart, fast-loading charging. Listeners, we're strategically meaningful. We are developing our business by making targeted purchases. As you'll have seen from our press release at the beginning of April, Infineon planned to take up the automotive Ethernet business of Marvell Technology. The purchase price agreed is EUR 2.5 billion, US dollars. Why did we decide on this acquisition? Marvell is a leading provider of Ethernet solutions for networks in vehicles.

Speaker Change: Which means that we've achieved the first design win with this solution.

The further development of the existing 12 channels design makes.

Speaker Change: It makes it more complex systems parcel, which is particularly important for the coming 800 volt battery systems with this innovation, we are setting a new standard in the industry for ultra precise sensors and smart fast loading charging.

Listeners.

Jochen Hanebeck: Where it's strategically meaningful, we're developing our business by making targeted purchases.

What strategically meaningful we are developing out of business by making targeted purchases as you listen from a press release at the beginning of April and fitness brand to take up the automotive Ethernet business Marvell technology. The purchase price of greed is two and a half billion Euro U S dollars.

Jochen Hanebeck: As you'll have seen from our press release at the beginning of April, Infineon is planning to take over the automotive Ethernet business of Marvel Technology. The purchase price agreed is two and a half billion US dollars.

Jochen Hanebeck: Why did we decide on this acquisition? Marvel is a leading provider of Ethernet solutions for networks in vehicles. This technology is a central component for mobility in future. It matches our own competences brilliantly and our own approach to offer our customers comprehensive system solutions. With the plan to take over, we shall expand system competence for software-defined vehicles. And at the same time, we shall strengthen a microcontroller business. The Ethernet business of Marvel is growing strongly and is highly profitable. Which means after the integration, it will have a positive contribution to the growth and margin of ATV.

Why did we decide on this acquisition.

Speaker Change: <unk> is a leading provider of Ethernet solutions for networks in vehicles. This technology is a central component for mobility and future.

Jochen Hanebeck: This technology is a central component for mobility in future. It matches our own competencies brilliantly and our own approach to offer our customers comprehensive system solutions. With the planned takeover, we shall expand our system competence for software-defined vehicles, and at the same time, we shall strengthen our microcontroller business. The Ethernet business of Marvell is growing strongly and is highly profitable. Which is after the integration, it will have a positive contribution to the growth and margin at ATV. Ethernet communications are key technology, not just for the future of cars, but also in the field of future IoT applications such as humanoid robots. With the acquisition, we're opening up more new opportunities. The transaction is subject to the standard approvals from the authorities. We're confident that we should be able to complete it in the course of this calendar year. Let's now turn to Green Industrial Power.

It matches, our own competence is brilliantly and our own approach to offer our customers comprehensive system solutions with a plan to take over.

Speaker Change: We show expand our system competence for software defined vehicles at the same time, we shall strengthen our microcontroller business. The Ethernet business of Marvell is growing strongly and is highly profitable, which does obviously into gration I will have a positive contribution to the growth in March and it's a T V.

Jochen Hanebeck: Ethernet communication is a key technology, not just for the future of cars, but also in the field of future IoT applications such as humanoid robots. With the acquisition, we're opening up more new opportunities.

Speaker Change: He's got a communications a key technology not just for the future of.

Speaker Change: Cause but also in the field of future Iot applications, such as humanoid robots.

Speaker Change: With the acquisition we are opening up.

<unk> new opportunities.

Jochen Hanebeck: The transaction is subject to the standard approvals from the authorities. We're confident that we shall be able to complete it in the course of this calendar year.

Speaker Change: The transaction is subject to the standard approvals from the authorities. We are confident that we should be able to complete it in the course of this calendar year.

Jochen Hanebeck: Let's now turn to green industrial power. As of the end of the March quarter, we achieved revenue of 397 million Euros, which is well up, namely 17% compared to the low revenue level in the December quarter. All the application fields contributed to this growth because the expected gradual recovery demand in industrial applications has improved.

Let's now turn to Green industrial power.

Jochen Hanebeck: As of the end of the Q2, we achieved revenue of EUR 397 million, which is well up, namely 17% compared to the low revenue level in the Q1. All the application fields contribute to this growth because the expected gradual recovery demand in industrial applications has improved. The fact that the quarterly revenue of GIP was 15% below the level of the previous sales quarter shows that the recovery is far from completed. Segment Result was EUR 38 million, and Segment Result Margin was 9.6%, falling 10% in the previous quarter. Basically, negative price effects cancel out the positive margin effects from higher sales quantities. In addition, there was an underutilization of capacity which caused costs. Industrial applications see the beginnings of a gradual recovery in demand.

And so at the end of the March quarter.

Speaker Change: We achieved revenue of 397 million euros, which is well up maybe 17% compared to the low revenue level in the December quarter.

Speaker Change: The application of fails contribute to this growth because of the expected gradual recovery in demand in industrial applications has improved the fact that the quarterly revenue of G. I P was 50% below the level of previous quarter shows that the recovery is far from complete it.

Jochen Hanebeck: The fact that the quarterly revenue of GEIP was 50% below the level of the previous quarter shows that the recovery is far from completed. The second result was 38 million euros and the second result margin was 9.6%, falling 10% in the previous quarter. Basically, negative price effects cancel out the positive margin effects from higher sales quantities. And in addition, there was an underutilization of capacity, which caused costs. In other applications, we see the beginnings of a gradual recovery in demand. Customers' inventories are tending to decline but have not yet reached normal levels. Orders in the supply chain are gradually picking up, but they're not yet being reflected in the broader demand for power semiconductors.

Speaker Change: The second result was 38 million euros in segment margin was nine 6% falling 10% in the previous quarter.

Speaker Change: Basically negative price effect canceled out the positive margin effects from the higher sales quantities and in addition, there was an under utilization of capacity.

Paucity, which caused costs.

Speaker Change: And as those are applications see the beginnings of a gradual recovery in demand.

Jochen Hanebeck: Customers' inventories are trending to decline, but have not yet reached normal levels. Orders in the supply chain are gradually picking up, but they're not yet being reflected in the broader demand for power semiconductors. Increasing tariffs, whether threatened or actually implemented, are causing additional uncertainty. In this environment, the price pressure is continuing, especially in standard power semiconductors in China. The prices of silicon carbide in this category are developing dynamically, not least because of the reduction in substrate prices. The substrate is increasingly becoming a standardized buy part, and we are benefiting from the broad base and regionally diversified supplier network. The general pressure on prices and market growth will curb growth in the near future, so we're adapting our guidance for revenue in the silicon carbide solutions in fiscal 2025. On a group level, without possible tariff effects, we are expecting a low growth rate.

Customers' inventories are.

Speaker Change: Tending to decline, but have not yet straits normal levels oldest in the supply chain are gradually picking up but they're not yet being reflected in the broader demand for power semiconductors.

Jochen Hanebeck: Increasing tariffs, whether threatened or actually implemented, are causing additional uncertainty. In this environment, the price pressure is continuing, especially in standard power semiconductors in China. The price of silicon carbide in this category are developing dynamically, not least because of the reduction in substrate prices. The substrate has increasingly become a standardized by-part, and we are benefiting from the broad base and regionally diversified supplier network. The general pressure on prices and market growth will curb. growth in the near future.

Speaker Change: Increasing terrorist with a threatened or actually implemented are causing additional uncertainty.

In this environment the price pressure is continuing especially in standard power semiconductor in China. The price of Silicon carbide. In this category are developing dynamically not least because of the reduction in substrate substrate prices.

Stretches increasingly become a standardized by part and we are benefiting from the broad base and regional diversified supply network.

Speaker Change: The general pressure on prices and market grows we'll cub.

Growth in the near future and adapting our guidance for revenue in the Silicon carbide solutions in fiscal 'twenty five.

Jochen Hanebeck: So we're adapting our guidance for revenue in the silicon garbage solutions in fiscal 25. On the group level, without possible tariff effects, we're expecting a low growth rate. At the same time, the structural growth drivers are unbroken. The demand for renewable energies is increasing worldwide. Investments in the energy infrastructure is continuing, for example in China, but also because of state initiatives in Europe. This applies both to energy transmission and distribution and storage, and also to uninterruptible power supplies. These are needed not just for expanding AI data centers and the charging infrastructure for electrical vehicles. With the outstanding offer of power supply solutions, we are playing a key role in all these sectors.

Group level.

Without possible.

Tariff effect. So we are expecting a low growth rate at the same time, the structural growth drivers of unbroken demand for renewable energies is increasing worldwide investments in the energy infrastructure is continuing for example in China, but also because of state initiatives in Europe, the supply supposed to energy transmission.

Jochen Hanebeck: At the same time, the structural growth drivers are unbroken. The demand for renewable energies is increasing worldwide. Investments in the energy infrastructure is continuing, for example, in China, but also because of state initiatives in Europe. This applies both to energy transmission and distribution and storage, and also to uninterruptible power supplies. These are needed not just for expanding AI data centers and the charging infrastructure for electrical vehicles. With our outstanding offer of power supply solutions, we are playing a key role in all these sectors. Now, the Power and Sensor Systems segment. Revenue at PSS in Q2 dropped slightly by 1% to EUR 979 million. With our power solutions for AI data centers, we were able to record lasting growth momentum.

On distribution and storage and also to uninterruptible power supplies.

Speaker Change: I know you did not just for the expanding AI data centers and they're charging infrastructure for electrical vehicles.

With our outstanding offer of power supply solutions, we are playing a key role in all these sectors.

Jochen Hanebeck: Now, the Power and Sensor Systems section. Revenue at PSS in the second quarter dropped slightly by 1% to 979 million Euros. With our pious solutions for AA data centers, we were able to record lasting growth momentum. At the same time, the most consumer applications met the price adjustments and the demand for smart components and solutions remained stable. The segmented result was €180 million, and the segmented result margin dropped to 14.1%, falling 17.1% in the previous quarter. But the previous quarter included the compensation payment from a customer amounting to a mid-double-digit million figure. And without this special effect, the margin has increased in the second quarter.

Now the power and sensor systems segment.

Speaker Change: Revenue at P. S S.

Speaker Change: In the second quarter dropped slightly by 1% to 917 9 million euros with alpine somebody chips for AI data centers, we were able to record a lasting growth momentum at.

Jochen Hanebeck: At the same time, the most consumer applications met the price, uh, adjustments and the demand for smarter components and s-solutions remained stable. The segment result was a hundred and thirty million euros, and the segment result margin dropped to fourteen point one percent, falling seventeen point one since the previous quarter. But the previous quarter included the compensation payment from a customer amounting to a mid-double-digit million figure. And this special-- Without this special effect, the margin has increased in the second quarter. If we look at the type of PSS, we can see that consumer computer and communication applications have bottomed out. Short-term orders are increasing, and the cancellation rate in orders is declining. Inventories in the distribution channels are reaching normal levels. The fast spread of art-artificial intelligence remains a major driver for growth in our business.

Speaker Change: At the same time, the most consumer applications met the price.

Adjustments and the demand for smartphone coupons and institutions remained stable.

Speaker Change: The segment result was 108 billion euros on the segment result margin dropped to 14, 1% falling 17, but once in the previous quarter, but the previous quarter included the compensation payment from a customer and amounting to a mid double digit million figure out and fish special if without this special effect.

Jane has increased in the second quarter.

Jochen Hanebeck: If we look at the type of SPSS, we can see that consumer computer and communication applications have bottomed out. Short-term orders are increasing and the cancellation rate in orders is declining. Inventories in the distribution channels are reaching normal levels.

If we look at the talk about it's a P. S. I shouldn't say the consumer computing and communications applications have bottomed out shorter term orders are increasing and the cancellation rates in autos is declining.

Speaker Change: Inventories in the distribution channels are reaching normal levels.

Jochen Hanebeck: The fast spread of artificial intelligence remains a major driver for growth in our business. Setting up AI data centers and the infrastructure needed is advancing, and we can see that our business is developing as dynamically as we expected.

Speaker Change: The fast spread of optic artificial intelligence remains a major driver for growth in a business setting up a eight data centers and the infrastructure needed is advancing our business developing as dynamically as we expected.

Jochen Hanebeck: Setting up AI data centers and the infrastructure needed is advancing. We see that our business developing as dynamically as we expected. Now, our Connected Secure Systems segment. In Q2, the division achieved revenue of EUR 356 million, which is an increase by 3% compared to the December quarter. Because of the higher revenue and favored by the structural effects, the segment result rose to EUR 40 million, which corresponds to a Segment Result Margin of 11.2%. In the previous quarter, it was 8.7%. Demand for IoT and security solutions remains weak. Microeconomic uncertainty are putting a burden on the consumer climate and companies' expenditures. In this environment, we expect that the innovations will form the base of future growth. Microcontrollers are heart of modern electronics. Our broad portfolio is being continuously further developed.

Jochen Hanebeck: Now, connected secure systems segment. In the second quarter, the division achieved revenue of 356 million euros, which is an increase by 3% compared to the December quarter. because of the higher revenue and favoured by the structural effect, the second result rose to €40 million, which corresponds to a second result margin of 11.2%. In the previous quarter it was 8.7%.

Speaker Change: Now connected secure systems segment.

Speaker Change: In the second quarter. The division achieved revenue of 356 million euros, which is an increase by 3% compared to the December quarter.

Speaker Change: Because of the higher revenue and favored by the structured affects our segment result rose to 40 million euros, which corresponds to a segment result margin of 11, 2% in the previous quarter. It was eight point to 7%.

Jochen Hanebeck: The demand for IoT and security solutions remains weak. microeconomic uncertainty, putting a burden on the consumer climate and Thank you by adding a new inductive sensor technology and a non-invasive, contact-free solution for detecting liquid levels. With this technology, we're offering developments of electric devices new opportunities. This includes the waterproof touch interfaces and innovative methods for measuring liquids. In addition, with our PSoC Edge family, we're driving the introduction of AI-supported applications. With the integration of NVIDIA tower models in the microcontrollers, our customers can develop Edge devices much more quickly, which is accelerating the market introduction of applications capable of machine learning for industrial automation in medical engineering, consumer sector, and in smart IoT solutions.

Speaker Change: So demand for Iot and secret distributions remains weak.

Speaker Change: Microeconomic uncertainty they are putting a burden on the consumer climate and.

Speaker Change: Company's expenditures under this scenario, we expect that the innovations will form the basis of future growth Microcontrollers, a heart of modern electronics, a broad portfolio of Spain contingency father developed ourselves now piece oak for Microcontrollers have multi sentence, which acts.

Jochen Hanebeck: As of now, our PSoC 4 microcontrollers have Multi-Sense, which expands our leading sensor technology in CAPSENSE by adding a new inductive sensor technology and a non-invasive contact-free solution for detecting liquid levels. With this technology, we offer the elements of electric devices new opportunities. This includes the waterproof touch interfaces and innovative methods for measuring liquids. In addition, with our PSoC Edge family, we are driving the introduction of AI-supported applications. With the integration of NVIDIA TensorRT models in the microcontrollers, our customers can develop Edge devices much more quickly, which is accelerating the market introduction of applications capable of machine learning for industrial automation in medical engineering, consumer sector, and in smart IoT solutions. Listeners, I now come to the outlook. Let's look at the cyclical dynamism of our target markets. This confirms our existing forecasts.

Speaker Change: Spencer, leading sensor technology and cup sentence.

By adding a new inductive sensor technology and noninvasive contact free solution for detecting liquid levels with this technology to offer the detriments of electric devices new opportunities. This includes the waterproof touch interfaces and innovative methods for measuring liquids.

Speaker Change: In addition, with our pizza edge family, we are driving the introduction of AI supported applications.

Speaker Change: With the integration of Nvidia Taro models into Microcontrollers, our customers can develop edge devices much more quickly, which is accelerating the market introduction of applications capable of machine learning for industrial automation in medical engineering consumer sector didn't smart Iot solutions.

Speaker Change: <unk>.

Jochen Hanebeck: Listeners, I now come to The Outlook. Let's look at the cyclical dynamism of our target markets. This confirms existing forecasts. The digestion of inventories in the semiconductor industry is largely completed in the automotive industry. In industrial applications, the trend is down. And in the markets close to consumers, inventories are reaching normal levels which lays the foundations for a cyclical upspring. So far, we've been cautiously optimistic that there'll be a slight improvement in demand in the second half of fiscal 2025. And if there's no massive changes in and uncertainties in the tariff policy, then we would confirm our forecast from the last quarter, even taking into account a substantial negative currency effect.

Speaker Change: Business and I've come to the outlook.

Speaker Change: Let's look at our site click the dynamism of our target markets. This confirms our existing forecast the digestion of.

Jochen Hanebeck: The digestion of inventories in the semiconductor industry is largely completed in the automotive industry. Industrial applications, the trend is down, and in the markets close to consumers, inventories are reaching normal levels, which lays the foundations for a cyclical upspring. So far, we've been cautiously optimistic that there'll be a slight improvement in demand in the second half of fiscal 2025. If there's no massive changes in and uncertainties in the tariff policy, then we would confirm our forecast for Q4, even taking into account a substantial negative currency effect. The macroeconomic and geopolitical factors influencing our business are changing all the time. The trade conflicts have become worse, triggered by announced, implemented, and sometimes canceled tariffs and counter-tariffs. As yet, no semiconductor-specific tariffs has been introduced.

Speaker Change: Inventories in the semiconductor industry is largely completed and the automotive industry industrial applications. The trend is.

Speaker Change: Down and in the market is close to consumers.

Speaker Change: The trees are reaching normal levels, which lays the foundations for a cyclical ups being so.

Speaker Change: So far we've been cautiously optimistic that there'll be a slight improvement in demand in the second half of fiscal 2020 five.

And if there's no massive changes in and uncertainty and the tariff policy then we would confirm our forecast for the last quarter, even taking a couch.

Speaker Change: Subs done show negative currency effect, but the macroeconomic and geopolitical factors influencing our business are changing all the time the.

Jochen Hanebeck: But the macroeconomic and geopolitical factors influencing our business are changing all the time. Trade conflicts have become worse, triggered by announced... implemented and sometimes cancelled tariffs and counter tariffs. As yet, no semi-drug-specific tariffs have been introduced. The high level of uncertainty because of the tariff discussion is, however, putting a burden on customer demand and of end markets. Following an ounce of a 90-day pause before the introduction of reciprocal tariffs, there's no... Clarity about the level of US-American tariffs or potential retaliatory tariffs does appear clear, however, that it will impair economic growth. The demand for semiconductors probably also could be affected by further developments along the supply chain, because producing companies need to be able to estimate the effects of tariffs.

Speaker Change: Trade conflict Sop become was triggered by announced.

Speaker Change: Implemented and sometimes cancelled tariffs and counter tariffs.

As yet no semiconductor specific tariffs have been introduced.

Jochen Hanebeck: The high level of uncertainty because of the tariff discussion is, however, putting a burden on customer demand and of end markets. Following the announcement of a 90-day pause before the introduction of reciprocal tariffs, there's no clarity about the level of US American tariffs or potential retaliatory tariffs. It does appear clear, however, that it will impair economic growth. The demand for semiconductors probably also could be affected by further developments along the supply chain because producing companies need to be able to estimate the effects of tariffs, the effects on the demand for their products, the manufacturing strategy, and the locations where they supply their semiconductors. If the potential weaker demand, there's probably going to be a further digestion of inventories in some companies, but others will build up their inventories to be prepared for geopolitical risks.

Speaker Change: The high level of uncertainty because of the type of discussion is however, putting a button on customer demand and the end markets. Finally, non sort of a 90 day pause before the introduction of a reciprocal that tariff says no.

Speaker Change: Clarity about that level of U S American that tariff so potential retaliatory tariffs does appear clear, but that it will impair economic growth the demand for semiconductors, partly also could be affected by positive elements, along the supply chain because producing companies need to be able to estimate the effects of <unk>.

Speaker Change: Terrorists.

Jochen Hanebeck: The effects on the demand for their products, the manufacturing strategy and the locations where they... We see no effects in our order books so far, but we expect in the course of the fiscal year that this will happen.

Speaker Change: So on the demand for their products they manufacturing strategy in the locations where they.

Speaker Change: Supply is that semiconductors, and if there's a potential weaker demand.

Speaker Change: There's probably going to be.

Speaker Change: Further digestion of inventories in some companies, but others little built up the inventories to be prepared for people to take risks.

Jochen Hanebeck: As we see no effects in our order books so far, but we expect in the course of the fiscal year this will happen. The degree and duration of these indirect effects are difficult to assess. Since we consider negative effects are probable, we are adjusting our guidance. Let me now begin with our guidance for the fiscal 2025 as a whole. With our outlook in February, we'd been expecting a stable to slightly increased annual revenue. That expectation was based on an exchange of the US dollar to the euro of 1.05. Now we're changing our assumptions for the exchange rates for the rest of the fiscal year to 1.125.

Speaker Change: We see no effects in our order books, so far but we expect in the course of the fiscal year and this will happen.

Jochen Hanebeck: The degree and duration of these indirect effects are difficult to assess, but since we can say the negative effects are probable, we are adjusting our guidance.

Speaker Change: The degree and duration of these indirect effects are difficult to assess but since fixed at a negative effect.

Speaker Change: Probable we are adjusting our guidance let.

Jochen Hanebeck: Let me now begin with our guidance for the fiscal 2025 as a whole. With the outcome in February, we'd been expecting a stable to slightly increased annual revenue. That expectation is based on an exchange of the US dollar to the euro of 1.05. Now, we're changing our assumptions for the exchange rates for the rest of the fiscal year to 1.125. Even with this negative exchange rate effect, we would be within the bandwidth of our existing guidance which expected second result margin, the mid to high teens in percentage terms. Because of the indirect negative demand effects of the tariff insertions, we have to bear this in mind.

Speaker Change: Let me now begin with our guidance for the fiscal 'twenty to 'twenty five as a whole.

Speaker Change: With that I took in February we'd been expecting a stable to slightly increased annual revenue that expectation of space to them in exchange of the U S. Dollar to the Euro of 1.5 now we're changing our assumptions for the exchange rates for the rest of the fiscal year to 1.125, even.

Jochen Hanebeck: Even with this negative exchange rate effect, we would be within the bandwidth of our existing guidance, which expected Segment Result Margin in the mid to high teens in percentage terms. Because of the indirect negative demand effects associated tariff uncertainty, we're going to have to bear this in mind. If you look at the announced by a number of automotive manufacturers who've either canceled out their guidance for growth in 2025 completely or reduced it considerably. Other markets are also affected by the headwind from tariffs. Since we cannot calculate these effects nor derive anything from changes in our customers' order behavior, we're making a global assumption on the scale of about 10% for our planned revenue in Q4 of the fiscal year.

Speaker Change: With this negative <unk>.

Speaker Change: Exchange rate effect, we would be within our.

Speaker Change: The bandwidth felt by existing guidance, which you expected a.

Speaker Change: Secondly, without much in the mid to high teens in percentage terms because of an indirect negative demand effects that cortisol tariff incentives, we got to bear. This in mind. If you look at the non spots on a number of automotive manufactures who either council that our guidance for growth in 'twenty attentive off completely or virtue.

Jochen Hanebeck: If you look at the announced by a number of automotive manufacturers who either cancel out their guidance for growth in 2025 completely or reduced it considerably. Other markets are also affected by the headwind from tariffs. Since we cannot calculate these effects nor derive anything from changes in our customers' order behavior, we're making a global assumption on the scale of about 10% for our planned revenue in the fourth quarter of the fiscal year. Taking into account the two factors I've mentioned, our tariffs and the negative exchange rate effect for us, we assume that our revenue in fiscal 25 will be slightly lower than in the previous year.

Speaker Change: It is considerably.

Speaker Change: Other markets also affected by the headwind from tariffs.

Speaker Change: Since we cannot calculate this effect snow.

Speaker Change: Derive anything from changes in our customers' order behavior, we're making a global assumption on the scale of about 10% for our planned revenue in the fourth quarter of the fiscal yeah taken.

Jochen Hanebeck: Taking into account the two factors I've mentioned, like tariffs and the negative exchange rate effect for us, we assume that our revenue in fiscal 2025 will be slightly lower than in the previous year. Our reduced forecast for revenue has consequence for the profitability as follows. With the Segment Result Margin is now expected in the mid-teens, whereas previously been the mid to high teens. Idle costs largely caused by the developmental cycle in the second half of the fiscal year will be higher than expected. For fiscal 2025, we now expect idle costs of about EUR 1 billion. These are likely to pull down a Segment Result Margin by about six percentage points. We continue to make major efforts to secure our current profitability level and even to improve it.

Speaker Change: Taking into account the two factors I've mentioned tariffs and the negative.

Speaker Change: Change right effect for us we assume that our revenue in fiscal 'twenty five will be slightly lower than in the previous year.

Jochen Hanebeck: Our accused full cost, full revenue is, has Consequence for the profitability as follows, the segment result margin is now expected to be in the mid-teens, whereas previously it had been in the mid-to-high teens. The idle cost, largely caused by the development of the cycle, in the second half of the fiscal year will be higher than expected. For fiscal 2025, we now expect idle costs of about €1 billion. these likely pull down a segment result margin by about 6 percentage points. We continue to make major efforts to secure our current profitability level and even to improve it.

Speaker Change: Alright used full cost full revenue is has.

Speaker Change: Consequently, the profitability as follows with the segment result margin is.

Speaker Change: It's now expected in the mid teens, whereas previous had been the mid to high teens.

Idle costs largely caused by the development of a cycle in the second half of the fiscal year will be higher than expected for fiscal 2025, we now expect idle costs were about 1 billion euros.

Speaker Change: These are likely to pull down a segment result margin by about six percentage points.

Speaker Change: We continue to make major efforts to secure our current profitability level and even to improve it.

Jochen Hanebeck: In addition, from the first positive effects of our step-up initiative, we hope to benefit from the results and we're making progress on this initiative as planned.

Jochen Hanebeck: In addition, from the first positive effects of our STEP initiative, we hope to benefit from the results, and we're making progress on this initiative as planned. In view of the changed framework conditions, we are adjusting our planned investments for the current fiscal year from EUR 2.5 billion to EUR 2.3 billion now. For the reported free cash flow, we continue to expect a level of about EUR 900 million. Adjusted to current investment large front-end buildings, we expect a free cash flow about EUR 1.6 billion. Previously, it had been EUR 1.7 billion because part of the investment adjustments affect major front-end buildings. In the current Q3 of our fiscal year, we expect revenue of EUR 3.7 billion, which corresponds to an increase in revenue of about 3% compared to the previous quarter.

Speaker Change: In addition from the first positive effect self I'll step up initiative, where you hope to benefit from their cells and we're making progress on this initiative as planned.

Jochen Hanebeck: In view of the changed framework conditions, we are adjusting our planned investments for the current fiscal year from 2.5 billions to 2.3 billion Euros now. For the reported free cash flow, we continue to expect a level of about 900 million euros. The second result margin is expected to be in the mid-teens. Compared to the previous quarter, we expect an unfavorable exchange rate for us.

Speaker Change: In view of the changed framework conditions were adjusting our planned investments for the current fiscal year from $2 five billions to $2 3 billion euros now.

Speaker Change: For the reported free cash flow, we continue to expect a level of about 900 million euros.

Speaker Change: Adjusted Kindergarten investment large front end is buildings, we expect our free cash flow of about $1 6 billion euros previous after being $1 7 billion of yours, because part of the investment adjustments affect major front end buildings in the third quarter of our fiscal year <unk>.

Speaker Change: Revenue of $3 7 billion euros, which corresponds to an increase in revenue of about 3% compared to the previous quarter adjusted for currency effects. It would be about 8% across the segment about botching is expected to be in the mid teens compared to the previous quarter, we expect an.

Jochen Hanebeck: Adjusted for currency effects, it would be about 8% growth. The Segment Result Margin is expected to be in the mid-teens compared to the previous quarter. We expect an unfavorable exchange rate for us. There's also the effect of the annual pay increases, which take effect on 01 April 2024. Listeners, before we come to the question and answer session, two encouraging pieces of news. In the field of sustainability, we're continuing to make progress. We have set ourselves ambitious targets for carbon dioxide reduction by 2030, and now we're very happy that the well-known Science Based Targets initiative has validated and approved them. A valid science-based target, which also takes into account indirect emissions from the provision of raw materials by our suppliers, is an important milestone for us.

Speaker Change: Exchange rate for US then is that.

Jochen Hanebeck: Then there's also the effect of the annual pay increases, which take effect on the 1st of April.

Speaker Change: Also the effect of the annual pay increases which take effect on the first of April.

Jochen Hanebeck: So, listeners, before we come to the question and answer session, two... encouraging pieces of news. In the field of sustainability, we're continuing to make progress. We have set ourselves ambitious targets for carbon dioxide reduction by 2030, and now we're very happy that the well-known science-based targets initiative has validated and approved them. A validated science-based target which also takes into account indirect emissions from the provision of raw materials by our suppliers is an important milestone for us. We are working closely together with our partners in order to reduce emissions along the entire supply chain.

Speaker Change: So listen before we come to the question answer session too.

Speaker Change: Encouraging pieces of news in the field of sustainability, we're continuing to make progress we have set ourselves ambitious targets for carbon dioxide reduction about 2030 and that we're very happy that the well known science based targets initiative, that's validated and approved them if I, let the science based target with <unk>.

Speaker Change: So our indirect emissions from the provision of raw materials by our suppliers is an important milestone for US we are working closely together with our partners in order to reduce emissions along the entire supply chain.

Jochen Hanebeck: We are working closely together with our partners in order to reduce emissions along the entire supply chain. Another piece of good news for building our Smart Power Fab at the Dresden site. We've now got the final subsidy report. The federal government has given green light for subsidizing the factory in the context of the European Chips Act, and before that, the European Commission had granted approval in February. With the Smart Power Fab, we are making a contribution to strengthening European supply chains field of microelectronics, and we also strengthen the position of Dresden and Silicon Saxony as the biggest semiconductor hub in Europe. That brings me to the end of my remarks. Together with Sven Schneider, I'll now be happy to take any questions you might have. Thank you.

Jochen Hanebeck: And another piece of good news, for building a smart power famp at the Dresden site, we've now got the final... This subsidy report, the federal government has given green light for the subsidizing the factor in the context of the European Chips Act, and before that, the European Commission had granted approval in February. With the Smart Power Fab, we are making a contribution to strengthening European supply chains in the field of microelectronics, and we also strengthen the position of Dresden and Silicon Saxony as the biggest semiconductor hub in Europe.

Speaker Change: And another piece of good news for building a smart power fab at the dress side, we've now got the final.

Speaker Change: Subsidy reports the federal government has given the green light for the subsurface I'm starting to factor in the context of the European chips Acton before that the European Commission has granted US approval in February with a smart Pos fab, we are making a contribution to strengthening European supply chains will of microelectronics.

Speaker Change: And we also strengthen our position of Dresden and Silicon Saxony is our biggest semiconductor hub in Europe.

Jochen Hanebeck: That brings me to the end of my remarks together with Sven Schneider. I'll now be happy to take any questions you might have. Thank you.

Speaker Change: That brings me to the end of my remarks, together spend Schneider will not be happy to take any questions you might have thank you.

Operator: We're now going to begin with the Q&A session. If you'd like to ask a question, please press star one on your keypad. You will then hear a tone that will indicate that you're going to be added to the waiting list. If you'd like to withdraw a question, please press star two. The participants are kindly requested to use their handset. If you have a question, please use star one on your keypad now.

Speaker Change: You're beginning to admit that we're now going to begin with the Q&A session. If you'd like to ask a question. Please press star one on your keypad.

Operator: We are now going to begin with the Q&A session. If you would like to ask a question, please press star 1 on your keypad. You will then hear a tone. that will indicate that you're going to be added to the waiting list. If you'd like to withdraw a question, please press star 2. The participants are kindly requested to use their handset. If you have a question, please use star 1 on your keypad now. Just as a reminder, to ask a question, please press star 1 on your keypad.

Speaker Change: You wouldn't hear a tone.

Speaker Change: That would indicate that you're going to be added to the waiting list if you'd like to withdraw a question. Please press star to their participants are kindly requested.

Speaker Change: To use their handset.

Speaker Change: If you have a question. Please use star one on your keypad now.

Hey, Nicole just as a reminder to ask a question. Please press star one on your keypad.

Operator: Just as a reminder, to ask a question, please press star one on your keypad. The first question is from Hakan Ersen from Thomson Reuters.

Hakan Ersin: The first question is from Hakan Ersin from Thomson Reuters. Hello. I have two questions. First of all, Will the reciprocal taxes between China and the United States have an effect on your Chinese business, indirectly? I'm asking this because U.S. competitors may fall by the wayside on the local market.

Speaker Change: First question is from how kind of asking from Thomson Reuters Hello.

Hakan Ersen: Hello. I have two questions. First of all, will the reciprocal taxes between China and the United States have an effect on your Chinese business indirectly? I'm asking this because US competitors may fall by the wayside on the local market. The second question is this. You were quite optimistic in your statement on the power semiconductors for AI data centers. With respect to your growth assumptions, does that mean that you maintain your forecasts in this area?

Speaker Change: I have two questions first of all.

Speaker Change: Yeah.

Speaker Change: With the reciprocal taxes between China, and the United States have an effect on your Chinese business indirectly.

Speaker Change: I'm asking this because U S competitors may fall by the wayside on the local market. The second question is this.

Hakan Ersin: The second question is this. You were quite optimistic in your statement on the power semiconductors for AI data centers. With respect to your growth assumptions, does that mean that you maintain your forecasts in this area?

Speaker Change: Okay.

Speaker Change: You were quite optimistic on your statement on the power semiconductors for AI data centers.

Speaker Change: With respect to your growth assumptions does that mean that you maintain your forecasts in this area.

Jochen Hanebeck: Good morning, Mr. Ersson. Thank you very much for your questions. With respect to the second question, I would like to say the answer is a clear yes. The business in the power semiconductor business for AI data centers is posting very positive and dynamic development. The prognoses that I published in February are those that I would reaffirm today as well. In other words, we stand by our forecasts and in particular over the medium and long term we believe that there is substantial potential for growth.

Jochen Hanebeck: Good morning, Mr. Ersen. Thank you very much for your questions. With respect to the second question, I would like to say the answer is a clear yes. The business in the power semiconductor business for AI data centers is posting very positive and dynamic development. The prognoses that I published in February are those that I would reaffirm today as well. In other words, we stand by our forecasts, and in particular over the medium and long term, we believe that there is substantial potential for growth. Coming to your first question, the US, China taxes and tariffs. In the first phase, a couple of days ago, the Chinese tariffs on US imports. When we're talking about semiconductors, we're always talking about the front-end fabs in which the semiconductors are manufactured.

Speaker Change: Good morning, Mr. Allison. Thank you very much for your questions.

Speaker Change: With respect to the second question I would like to say the answer is a clear yes. The business in the power semiconductor business for AI data centers is.

Hosting very positive and dynamic development. The Poconos. These event I published in February.

Speaker Change: Are those that I would reaffirm today as well in other words, we stand by our forecasts and in particular over the medium and long term. We believe that there is substantial potential for growth coming to your first question.

Jochen Hanebeck: Coming to your first question. The U.S.-China taxes and tariffs in the first phase. A couple of days ago, the Chinese tariffs on U.S. imports And when we're talking about semiconductors, we're always talking about the front-end fabs in which the semiconductors are manufactured. Here, as well, semiconductors are included. But after a couple of days, that was corrected. There are only a very few exceptions where China is imposing tariffs on U.S. semiconductors. Therefore, from where we stand today, I believe that in...

The U S.

Speaker Change: And taxes and tariffs in the first phase.

Speaker Change: A couple of days ago, the Chinese tariffs on U S imports.

Speaker Change: And when we're talking about semiconductors, we're always talking about the fund front end fabs in which the semiconductors are manufactured.

Jochen Hanebeck: Here as well, semiconductors are included, but after a couple of days, that was corrected. There are only a very few exceptions where China is imposing tariffs on US semiconductors. Therefore, from where we stand today, I believe that in the overall context of the great uncertainty surrounding tariffs, you cannot draw any conclusions with respect to whether.

Speaker Change: Here as well semiconductors are included but after a couple of days that was corrected there are only a very few exceptions, where China is imposing tariffs on U S semiconductors. Therefore.

Speaker Change: From where we stand today I believe that in.

Jochen Hanebeck: The overall context of the great uncertainty surrounding tariffs, you cannot draw any conclusions with respect to whether... any fraction of the semiconductor manufacturers may have advantages or disadvantages as a result of the situation. We have to wait for things to become firmer.

Speaker Change: The overall context of the great uncertainty surrounding tariffs you cannot draw any conclusions with respect to weather.

Jochen Hanebeck: Any fraction of the semiconductor manufacturers may have advantages or disadvantages as a result of the situation. We have to wait for things to become firmer. Thank you very much. Just a reminder, if you'd like to ask a question, please press star one on your keypad. Ladies and gentlemen, that was the last question. I would like to hand the conference call back to Florian Martens for the concluding statements.

Jochen Hanebeck: Any fraction of the semiconductor manufacturers may have advantages or disadvantages as a result of the situation. We have to wait for things to become firmer.

Speaker Change: Any fraction of the semiconductor manufacturers may have advantages or disadvantages. As a result of this situation we have to wait for things to become.

Hakan Ersin: Thank you very much.

Speaker Change: Become firmer thank.

Hakan Ersen: Thank you very much.

Speaker Change: Thank you very much.

Operator: Just a reminder, if you'd like to ask a question, please press star one on your keypad. Ladies and gentlemen, that was the last question. I would like to hand the conference call back to Florian Martens for the concluding statements.

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

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

Speaker Change: Yeah.

Speaker Change: Okay.

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

Speaker Change: Ladies and gentlemen that was the last question I would like to hand, the conference call back to Florida and margins for the concluding statements.

Florian Martens: I would like to hand the conference call back to Florian Martens for the concluding statement. So, listeners, I'll sum up. In the second quarter, Infineon has done well and met its expectations. Our markets have bottomed out and inventories are reaching normal levels, which means under normal circumstances, the path would be open to a slight recovery.

Jochen Hanebeck: So it's likely correct. Wait, "In Q2, Infineon done well". "done" is a bit weird, but I must keep it. Wait, "fiscal 2025". "twenty twenty-five" -> "2025". Wait, "the fi-fiscal". Removed "fi-". Wait, "So listeners". Removed "So". Wait, "and so we're adjusting". Kept "and so" because it's not at the start of the sentence. Wait, "Which means we're preparing our company the best possible way for future success." This is a sentence. Wait, "Thank you for your interest and goodbye." This is a sentence. Wait, "Currently, we're concentrating on those things that we can control, our cycle management, our innovative strength, and the implementation of structural improvements in the company.

Florian Martens: So it's likely correct. Wait, "In Q2, Infineon done well". "done" is a bit weird, but I must keep it. Wait, "fiscal 2025". "twenty twenty-five" -> "2025". Wait, "the fi-fiscal". Removed "fi-". Wait, "So listeners". Removed "So". Wait, "and so we're adjusting". Kept "and so" because it's not at the start of the sentence. Wait, "Which means we're preparing our company the best possible way for future success." This is a sentence. Wait, "Thank you for your interest and goodbye." This is a sentence. Wait, "Currently, we're concentrating on those things that we can control, our cycle management, our innovative strength, and the implementation of structural improvements in the company.

Speaker Change: So listeners I'll sum up in the second quarter and finished unwilling merchants expectations on myself bottomed out and inventories are reaching.

Speaker Change: Normal levels, which means under normal circumstances, the path would be open to a slight.

Speaker Change: Recovery, however, the market uncertainties because of tariff arguments are probably being a headwind for the demand for semiconductors and so we are adjusting our guidance for the.

Florian Martens: However, the market uncertainties because of tariff arguments are providing a headwind for the semiconductors and so we're adjusting our guidance for the Thank you for your interest, and goodbye.

Speaker Change: Fiscal 'twenty tend to five currently we're concentrating on those things we can control our cycle management, our innovative strength and the implementation of structural improvements in the company, which means we are preparing an outcome in the best possible way for future success. Thank you for your interest and goodbye.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Hum.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Hum.

Speaker Change: Okay.

Speaker Change: Uh huh.

Speaker Change: Okay.

Q2 2025 Infineon Technologies AG Earnings Call - Press Conference

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