Q2 2025 Infineon Technologies AG Earnings Call
Good morning, everyone and welcome to the.
Conference call for analysts and Investor for opinions 2025 fiscal second results.
Speaker Change: Today's call will be hosted by Alexandra faulty Executive Vice President Finance Treasury and Investor Relations of Infineon technologies is.
As a reminder, this call is being recorded.
Speaker Change: This conference call contains forward looking statements or assessments about the business financial condition performance and strategy after Infineon Cook.
Speaker Change: These statements Endor assessments are based on assumptions and management expectation resting upon currently available information and present estimate.
Speaker Change: They are subject to a multitude of uncertainties and risks many of which are partially or entirely beyond infineon is control infineon actual business development financial conditions, and four beds and stretchers. She made that for differ materially from what is discussed in this conference call today.
Speaker Change: John's disclosure requirements stipulated by law opinion does not take any obligation to update. These forward looking statements at this time, it's my pleasure just went over to Infineon. Please go ahead.
Speaker Change: Good morning, Ladies and gentlemen, this is radio Infineon with C 100, <unk> broadcast of quarterly earnings in our corporate history on.
Johan: Under Mike's today, you have our CEO Johan <unk>, our CFO switching later and our CMO Andre Outsources.
Johan: That's when we'll provide a comprehensive overview on the market situation and the divisional performance key financials and our revised outlook.
Johan: After that we will start our Q&A session.
Johan: As usual the illustrating slideshow, which is synchronized with the telephone audio signal is available at Infineon Dot com slash slides.
Johan: We will again provide the P D F with Europeans and swings introductory remarks in the course of the call on our website Infineon Dot com investor.
Johan: There you will also find a recording of this conference call, including the slides a copy of our earnings press release as well as our investor presentation.
Johan: Now over to you.
Johan: Thank you Alexander and good morning, everyone.
Speaker Change: What a difference a quarter can make in terms of macro and geopolitical events shaping the environment in which we operate.
Speaker Change: Looking through these external factors for a moment the underlying business dynamics are largely unfolding for us as predicted we are past the cyclical trough with customers and distributors and most of our target markets and the process of editing that inventory corrections. Besides normalizing.
Speaker Change: Every level of the other key ingredient needed for a cyclical recovery is end demand picking up and it is here where the headwinds from tariffs are expected to come in and impact on demand over the remaining course of our running fiscal year is likely but nothing is yet visible in our.
Speaker Change: Order book.
Speaker Change: For Infineon, we therefore focus on managing what we can control staying agile in the face of short term market changes and simultaneously work on innovation and structural improvements to optimally set up our company for continued future success.
Speaker Change: Let's now look back at our March quarter, which has been an in line. One we recorded revenues of $3 billion of 591 million euros, 5% up compared to the previous quarter.
Speaker Change: The test volume effects were partially offset by annual price declines as expected.
Speaker Change: Currency played a minor wrote the average actual U S. Dollar Euro exchange rate was 105 in comparison to 107 in the quarter before.
Speaker Change: The segment result amounted to 601 million euros. The corresponding segment result margin of 16, 7% is the same as in the prior quarter, which was supported by a compensation payment from a customer of a mid double digit million amount.
Speaker Change: We were thus able to compensate for the kicking in of annual price adjustments in a fairly robust weight.
Speaker Change: Our order backlog at the end of March was standing at around 20 billion euros constant quarter over quarter in spite of annual price adjustments and a significantly weaker U S. Dollar at the end of Q2 compared to the end of Q1.
Speaker Change: Now to our division revenue beginning with automotive.
Speaker Change: And the second part of 'twenty to 'twenty five fiscal year automotive achieved revenues of 1.858 billion euros. This reflects healthy sequential growth of 6% and confirms the underlying improvement of the inventory digestion by customers throughout the quarter. Please note that.
Speaker Change: All reporting figures reflect the transfer off the sensor and control business line from a T V. Two P. S. S. As of January one 2025 oil.
Speaker Change: All comparisons provided our adjusted accordingly on a like for like basis.
Speaker Change: The segment result of ATV amounted to 385 million euros corresponding to a segment result margin of 20.7%. This represents a sequential improvement driven by higher volumes and favorable currency effect, which more than offset annual price adjustments and slightly increasing idle cost.
Speaker Change: We are very pleased to share that.
Later study from take insights, which confirms once more the exceptionally strong traction of our automotive semiconductor business in the market.
Speaker Change: Based on numbers for 2024, we continue to be the number one global automotive semiconductor provider with a market share of 13, 5%.
<unk> improved our regional positions further and climbed to number one in Europe and number two in U S. We also continue to hold a pole position in China as well as in Korea, and the number two spot in Japan, our market share in automotive Mcu's has risen to 32%, bringing us even to the global number one positions across.
Speaker Change: The entire MCU market for all applications.
Speaker Change: Now to the present situation, while our recent business performance was slightly better than our initial expectation the geopolitical environment has become significantly more volatile in recent weeks.
Speaker Change: Recently implemented U S import terrorists are likely to create headwinds for global vehicle production and responds market researcher S&P Global has recently lowered its forecast for this year to around 88 million units.
Turning now to our recent achievements we are pleased to share. Several notable milestone for the ATV business. For example, we won several slots with Orix Centreville microcontroller franchise and one of the lead platforms of a European premium OEM.
Speaker Change: The lifetime of this platform loss well into the 20th thirties more than half of all microcontroller sockets in the respective vehicles will be supplied by Infineon, resulting in an average content value of several hundred euros per car solar Lee from our microcontroller solutions.
Speaker Change: Another success includes the usage of our latest our X T. C. For microcontroller is a safety companionship for the next generation of our leading autonomous driving platform is high performance processing units requires an extraordinarily capable safety host together, they enable high speed Adas calculation and central.
Speaker Change: <unk> operations in a secure and dependable way. Moreover, this design win also incorporates infineon automotive grade up to Rick P make providing a complete power management solution.
Speaker Change: Lastly, we are proud to highlight a significant milestone in battery management system, a leading Chinese EV manufacturer has selected our new 18 channel a battery management system, marking the first design win for this next generation solution.
Speaker Change: The step up from the previous 12 channel design enables more compact battery management systems, which is especially important for the upcoming 800 volt battery systems. This innovation sets, a new industry benchmark for high precision sensing and intelligence fast charging capabilities.
Speaker Change: Finally on April eight we announced the signing of an agreement to acquire the automotive Ethernet business of Marvell for a purchase price of $2 5 billion U S dollars.
Strategic acquisition marks an important step in strengthening our market, leading microcontroller franchise, particularly in the context of zonal controllers laying the foundation for software defined vehicles. Besides this Ethernet will play a key role in other highly promising future application fields, such as humanoid robots the business.
Speaker Change: <unk> to be acquired is experiencing strong growth is highly profitable and thus be accretive to ATV growth and gross margin upon integration.
Speaker Change: The transaction is subject to customary regulatory approvals and we expect closing to occur within the color and calendar year.
Speaker Change: Let's now move to in Green industrial power from the very low revenue level of the December quarter Gi P recorded the expected sequential growth.
Speaker Change: Revenues increased by 17% quarter over quarter to 397 million euros.
All applications areas contributed to this growth hinting at the anticipated gradual recovery of industrial market setting and that being said the fact that cip's revenue level is 15% below last year's is showing that such recovery has still a long way to go.
Speaker Change: The segment result of G. I P came in at 38 million euros in the second quarter of our 2025 fiscal year, leaving the segment result margin at a depressed level of 10%.
Speaker Change: Essentially annual price declines offset sequential volume increases while underutilization charges remain a burden.
Speaker Change: From a cyclical perspective industrial markets are at the early stage of a gradual recovery Custer.
Speaker Change: Customer inventories are trending downwards, but has not yet normalized orders in the value chain are picking up slowly, but have yet to translate into broader demand for power semiconductors.
Speaker Change: Rising tariffs, whether threatened law enacted adding a layer of uncertainty in this environment pricing pressures are persisting in particular for standup power components in China.
Speaker Change: They are in Silicon carbide is seeing a dynamic evolution of prices not least driven by declining substrate prices in a more and more commoditizing market, where we benefit from our well diversified supplier base.
Speaker Change: In addition market participants apply forward pricing on the anticipated transition to 200 millimeters.
Speaker Change: As a consequent pricing pressures will dampen market expansion in the near term. Therefore, we adjust our projection and now estimate a low annual growth rate for our fiscal 2025 Silicon carbide revenues on group level before any tariff impact.
Speaker Change: Meanwhile, structural growth drivers are unabated globally, rising power and efficiency requirements support demand for energy generation from renewables as these are oftentimes the most economical sources related to this continuous power infrastructure investments are driven for example by capacity extensions of key players in.
Speaker Change: China and government initiatives in Europe.
Speaker Change: This affects area light transmission and distribution energy storage systems.
Speaker Change: Interruptible power supplies, not least to support AI data center build outs and also EV charging infrastructure.
Speaker Change: With our unrivaled offering of power solutions, we are playing a key role in these areas.
Speaker Change: Now to our power and sensor systems segment.
Speaker Change: PSS recorded revenues of 979 million euros in the March quarter, essentially flat compared to the previous quarter. These numbers include the mentioned automotive sensor business line transfer from ATV to PSS.
Speaker Change: While we noted continued strong growth momentum for our power solutions for AI servers, most consumer related application. So all the expected price downs revenue for smartphone components as well as for our sensor portfolio were flat quarter over quarter.
Speaker Change: The segment result of PSS decreased to 138 million euros corresponding to a segment result margin of 14, 1%.
Speaker Change: Please keep in mind that the previous quarter's numbers contained a compensation payment of a mid double digit million Euro amount received from a customer right in other words like for like the underlying margin is slightly expanded sequentially.
Looking at PFS target markets, we see that from a cyclical perspective consumer computing and communications applications has left the trough behind.
Speaker Change: This is confirmed by business indicators, such as rising short term orders backlog building low cancellation rates have normalized channel inventories.
Speaker Change: AI is poised to remain an engine of growth the buildout of AI data centers and related infrastructure is continuing at a fast clip and we see our business scaling up dynamically along the lines we had predicted.
Speaker Change: A key factor driving infineon success in this market as the unrivaled breadth and depth of our product offering.
Speaker Change: Instead of just focusing on individual power conversion steps, we are closely working together with the development teams of all top customers to Holistically design and optimize the entire power flow from grid to Corp.
Speaker Change: Together with the best Silicon and Silicon carbide, and gallium nitride dies with leading edge packaging technologies like chip embedding, we achieve superior power density energy efficiency and thermal performance as an example beyond power stages. We are now designed into the intermediate bus converters R. I B C's of one of the platforms of our.
Speaker Change: Leading AI process, a company with our Optima six five by six millimeter dual site cooling package, we are setting a new industry benchmark fitting optimally into the constrained space of AI servers for accelerated compute.
Speaker Change: To complete the divisional revenue, let's take a look at the connected secure systems. He has S record quarterly revenues of 356 million euros, representing a 3% increase to compare to the December quarter.
Speaker Change: Driven by higher revenues and some structural effects. The segment result of CSS rose to 40 million euros corresponding to a segment result margin of 11, 2%.
Speaker Change: Iot and security markets remain close to the bottom as macroeconomic uncertainties continue to weigh on consumer sentiment and corporate spending.
Speaker Change: Since this backdrop, we continue to innovate and deliver cutting edge products that lay the foundation for future growth.
Speaker Change: Executing on our development roadmap, we have further expanded our piece of microcontroller portfolio.
Speaker Change: Following the successful launch of piece of control, we introduce piece of our commodity sense family. This new lineup enhances infineon, leading cap sense capacitive sensing technology.
Speaker Change: Integrating proprietary inductive sensing as well as non invasive liquid sensing solutions. These advancements provide developers with unparalleled flexibility to create advanced H M I and sensing applications ranging from sleek metallic product designs with touch on metal buttons to waterproof touch interface.
Speaker Change: As an innovative liquid sensing technologies.
Speaker Change: In addition, we are driving the adoption of AI enabled applications with a piece of edge firmly by integrating Nvidia has te tower models into a comprehensive development ecosystem, including tools libraries, and Documentations, we enable developers to accelerate innovation and shorten time to me.
Speaker Change: Market for edge devices. This.
Speaker Change: This positions Infineon as a key player in the very dynamic edge AI space.
Speaker Change: Sustainability continues to be a core focus for infineon.
Speaker Change: We're proud of the strides we're making in this area with C Corp pay Green, we are leading the way in sustainable payment technologies. These solutions enables the production of fully recyclable dual interfaces contactless payment card bodies that eliminate the need for an additional cut antena our innovation has been <unk>.
Speaker Change: <unk> by both customers and industry leaders, including Mastercard, which has added infineon to its greener payments partnership.
Speaker Change: Now over to Sweden, who will comment on our key financial figures.
Sweden: Thank you Johan and good morning, everyone.
Sweden: Starting as usual with the gross margin as most of you are following infineon already for a long time.
Sweden: Yeah that the bulk of our contracted annual price changes is kicking in in the March quarter, typically constituting a burden.
Sweden: Considering this and the revenue levels still impacted by inventory digestion, but our customers. We are pleased to see that we could keep the adjusted gross margin above the 40% Mark with 49% it remains flat to the previous quarter's 41, 1% several factors.
Sweden: Were at play here volume and productivity gains contributed positively as well as a slightly favorable currency development on the other hand idle costs went up to some extent quarter over quarter.
Sweden: The reported gross margin decreased slightly quarter over quarter from $39 two to 38, 7%.
Sweden: On the Opex side research and development expenses went up slightly to 559 million euros in the March quarter. After 544 million euros in the December quarter, we are consistently building and innovation roadmap to nurture future opportunities for profitable growth Prime current examples are 12.
Sweden: Nanometer finfet tape out for future generation for Rx automotive microcontroller family or the introduction of a trench based Super junction concept for Silicon carbide devices.
Sweden: Our selling general and administrative expenses declined sequentially from 395 to 376 million euros evidence of strict cost discipline and showing the first fruits of the SG&A part.
Sweden: Step up initiatives.
Sweden: Net other operating expenses amounted to 138 million euros, mainly related to impairment charges on manufacturing equipment at our 200 millimeter Austin side, which we plan to sell to the U S. Foundry Sky water. These charges are part of the non segment result, which amounted to minus 283 million.
Sweden: For the March quarter.
Sweden: The financial results for the second quarter of our 2025 fiscal year amounted to minus 28 million euros after minus 17 million euros in the quarter before.
Sweden: Income tax expense for the March quarter amounted to 63 million euros equivalent to an effective tax rate of 22% cash taxes for our second fiscal quarter were 80 million euros down from 152 million euros in the previous quarter, which had contained payments made for prior years.
Sweden: <unk> four PPA effects, the quarterly cash tax rate stood at 20%.
Sweden: Our investments into property plant and equipment other intangible assets and capitalized development costs went down noticeably as planned and in line with our annual Capex budget from 731 to 470 million euros, depreciation and amortization expenses, including acquisition related non segment result.
Sweden: Effects remained essentially flat with 483 million euros.
Our free cash flow improved quarter over quarter from minus 237, two plus 174 million euros main drivers for the improvement were lower investments less pay taxes and the non recurrence of annual bonus payouts in the December quarter also changes in inventory.
Sweden: <unk> contributed positively here our cycle management efforts are showing positive effects in a challenging market environment characterized by customers and distributors Destocking. Our inventories went slightly down over the course of the March quarter, the reach declining from 190 to 100.
Sweden: 77 days towards the end of a running fiscal year, we continue to target a reach level in line with the end of last year.
Sweden: This implies that we will need to keep fab utilization levels at low levels also in the light of potential tariff related demand risks going forward quarterly idle charges would therefore be higher than previously anticipated and be a margin drag in our fiscal <unk> to Yahoo will comment on it.
Sweden: In the outlook session.
Sweden: Now to our liquidity and leverage our corporate finance team had an eventful and successful quarter. After signing a 2 billion euro of committed standby revolving credit facility about which we reported already last time is 700 million Euro bond was issued in February with a five year tenor and a coupon below below.
Sweden: 3% also in this quarter.
Sweden: We repaid a 500 million eurobond at maturity called and redeemed the 600 million Euro hybrid bond and paid out our annual dividend of 455 million euros at the end of March our gross cash position equated around one 7 billion euros, our gross debt amounted to $5 5 billion euros.
Sweden: These figures contained 400 million euros in drawn short term credit facilities. Our gross leverage is one five times net leverage is amounting to one one times.
Sweden: Financing of the planned acquisition of the automotive Ethernet business from <unk> is another example of how we apply our conservative financial policy, we have put in place a committed acquisition facility from our banks consisting of a 1 billion euros and 1 billion U S. Dollar tranche this facility.
Sweden: We will be drawn at closing for the majority of the remaining related currency risk of the planned acquisition. We have concluded so called do contingent foreign currency hedges S&P global has confirmed that the fully debt financed acquisition is commensurate with our investment grade rating of <unk>.
Sweden: Triple B plus stable.
Speaker Change: Finally, our after tax reported return on capital employed for the second fiscal quarter of 2025 came in at around 5% now back to Johan who will comment on our outlook.
Johan: Thank you Sven when looking at the cyclical dynamics in our target markets or initial predictions are providing to be fully correct inventory inventory corrections by automotive customers have largely ended.
Johan: In the industrial they are getting less intense stock levels and consumer markets have normalized with this as the foundation for a cyclical upturn would be late in principle.
Johan: Observing short term customer order behavior, and a higher share of turns business. We had so far been cautiously optimistic calling for a modus recovery in the second half of 2025 fiscal year. We continue to think this is what best describes the underlying dynamics.
And if there weren't any changes to tariff policies, we would essentially reiterate and confirm our guidance from last quarter, even taking a substantial negative currency effect from moving our U S dollar.
Johan: Euro exchange rate assumption from 105 to 1.125 into consideration.
Johan: But the world has changed in the macroeconomic and geopolitical factors are fast moving goalposts at presence trade conflicts have intensified Spotify announced enacted and partly false terrorists and counterterrorists theyre not yet semiconductor specific tariffs in place however in the <unk>.
Johan: <unk> situation around tariffs is impacting customer demand and likely leading to end market weakening.
Johan: After the announcement of a 90 day pause on the so called the resi protocols terrorists. There is currently no clarity around the extent of U S and potential retaliatory tariffs, but it seems a lot of digi cold that whatever the outcome economic growth is already impacted as uncertainty is weighing on consumer sentiment and coop.
Johan: <unk> investment in the short term.
Johan: If demand is also likely do be effected by supply chain disruptions as Oems assess the impact on the product demand their manufacturing strategy and which locations. They would one ships to be delivered to some.
Johan: Some are likely to cut inventory levels further in the light of potentially weaker demand others made restock to manage geopolitical volatility.
Johan: To be clear, we do not see any of these described impact in our order books yet.
Johan: But we expect them to come to a certain degree in the remainder of our current fiscal year.
Johan: Magnitude and duration of these indirect effect is highly difficult to predict but being mindful of them in fully transparent to you we decided to prudently adjust our outlook.
Johan: Downward.
Johan: Let me start with our outlook for the full 2025 fiscal year, which under German disclosure rules in contrast to our main international peers, we have to provide.
Johan: As you are aware, we had so far predicted our annual revenues to be flat to slightly up compared to fiscal 'twenty four based on a U S. Dollar Euro exchange rate of 105, we are now changing our currency assumption to 1.125 for the remainder of the fiscal year.
Johan: Even with this adverse currency effect, we would still be within the range of our former guidance, including a mid to high Teen segment result margin level.
Johan: However, we need to be mindful of likely tariff related indirect demand effects.
Johan: Take for example, the reason announcement of several automotive Oems, who either pause or meaningfully reduced their forecast for 2025 also other markets will probably be affected by tariff related headwinds.
Johan: As said, we are not able to calculate these effects or derive any number from our order intake or change in auto behavior of our customers at this moment in time.
Johan: Therefore, we guesstimate that.
Johan: <unk> at a magnitude of around 10% of our planned Q4 revenue.
Johan: Including both these sectors tariff and adverse currency impacts we now predict our revenues for the 2025 fiscal year to be slightly down on an annual basis.
Johan: Our reduced revenue outlook, consequently effects, our margin assumptions for the 2025 fiscal year, we expect our full year adjusted gross margin to come in around 40%, whereas our segment result margin.
Johan: Should land at a mid teens percentage.
Johan: Sure.
Johan: <unk> charges in the second half of our fiscal year will be higher than previously assumed.
Johan: For the full year, they are expected to amount to around 1 billion euros.
Johan: Vast majority of them is a cyclical nature to keep our inventories at healthy levels, considering a modern headwind now around 600 basis points for the 2025 fiscal year.
Johan: We will continue to manage what we can control and put in significant efforts to safeguard improve our current margin levels benefiting from the first positive effects of our step up initiatives. Overall, we are progressing with step up as planned.
Johan: The current context, we plan to reduce our investments, including capitalized development expenses to around $2 3 billion euros from around two five before for.
Johan: Depreciation and amortization, we now anticipate around one 9 billion, including around 400 million, resulting from purchase price allocations, which are recognized in our non segment result for.
Johan: While the reported free cash flow, we continue to expect a level of around 900 billion years.
Johan: Our adjusted free cash flow net of investments into major front end buildings is now expected to come in at around one 6 billion.
Johan: Compared to $1 7 billion.
Johan: As predicted before given that some of the invest is push outs affect large front end buildings.
Johan: For the sake of abandonment clarity our forecasts do not include the automotive Ethernet business of Marvell, which we intend to acquire.
Johan: For the currently running third quarter of our 2025 fiscal year, we expect revenues to come in at around three 7 billion euros equivalent to around 3% sequential growth. This also assumes a U S dollar euro exchange rate of 1.125, and hence the like for like growth.
Johan: At constant currencies would be around 8%.
Johan: On a divisional level, we expect a higher quarter over quarter growth rate for <unk> S. Where's ATV is assumed to grow below group average for CSS, we forecast revenues to be sequentially down.
Johan: While the June quarter segment result margin, we expect a mid teens percentage level.
Johan: Terrorism to the March quarter, we expect less favorable currency relations as well as an impact from annual merit increases which became effective on April 1st.
Johan: Before coming to the summary, I would like to share two additional good news with you. The first is another milestone on our sustainability roadmap. The science based target initiative has officially approved our science based target.
Johan: Target include scope, three emissions and covering purchase goods and services capital goods and upstream transportation and distribution.
Johan: Having a validated science based target, including scope three emissions is an important milestone for us and will further strengthen <unk> position as role model and sustainability there.
Johan: The second piece of good news is about our smart power set we are currently building in rates then the German government has issued the final funding approval supporting fifth of the overall investment. Meanwhile, the construction of our new fab for analog mixed signal and power project is proceeding as planned the building shell almost is.
Johan: Complete, bringing highly efficient scalable and resilient supply four fields like renewable energy is data centers and E mobility.
Johan: Before going into Q&A, ladies and gentlemen, let me summarize the second quarter of our 2025 fiscal year came in fully in line with our expectations with revenues of $3 6 billion euros in a segment result margin of 16, 7%.
Johan: As market data is showing infineon has fortified and expanded its global leadership in automotive semiconductors. The planned acquisition of Marvel's automotive Ethernet business will position us optimally to shape the future of software defined vehicles, but also in areas like humanoid robots.
Johan: Outside of the automotive several high growth applications areas prove our innovative strengthened system competence is first and foremost powering AI data centers, but also energy storage systems, our edge AI solutions are gaining traction.
Johan: Our markets have bottomed and inventory levels, mostly normalized normally the runway would be clear for the envisioned modest recovery to setting.
Johan: S tariff induced market uncertainties are constituting indirect demand headwinds to account for these we can only guess the potential impact at this point, including this as well as a weaker U S. Dollar we revised our revenue guidance for fiscal 'twenty five to slightly down cycle.
Johan: Cycle management and focusing on things, we can control remain keenly to navigate their near term beyond that our growth potential remains highly attractive and we are strengthening our innovation power and leverage structural improvements to optimally benefit from secular trends.
Johan: Yeah.
Johan: Thank you Johan and threaten ladies and gentlemen. This concludes the introductory part of our broadcast today. We're now opening the call for the interactive part I E. Your questions.
We kindly ask you to limit yourself to one question and one follow up operator, please start the Q&A session.
Johan: Thank you our question and answer session will be conducted electronically. If you would like to ask a question simply press star followed by one on your telephone.
Speaker Change: Joining us using a speaker phone. Please ensure that your mute function is turned off and we will take our first question from <unk> Bank of America. Please go ahead.
Speaker Change: Yes, good morning, James Thanks, So much for taking my question. My first question, maybe for Dan on the margin guidance for the full year.
Speaker Change: The revision from mid to high teens mid teens I, just wanted to understand the mechanics, a little bit because.
Speaker Change: Obviously, you you are you.
Speaker Change: You are not quite there when you were guiding at 110 before so I just wanted to understand gross margin you said adjusted about 40%.
Speaker Change: Are there any specific elements in opex, we should be mindful off or are you seeing more pricing pressure, perhaps that would warrant the lower segment result margin and I've got a follow up thank you.
Speaker Change: Yes. Thank you for asking so first of all starting with the gross margin. So indeed, it's at around 40, which stays at that level is now in around 40, there are different levels at play.
Speaker Change: Taking our haircut for the Q4 into consideration there's of course, a certain volume reduction included which then is also translated to be consistent.
Speaker Change: Hi, Underutilization charges and that's of course, the negative for gross margin and segment result margin. That's one change to to the last to the last call. It two to what extent that will materialize.
Speaker Change: Of course do not know as Johan has said, it's a guesstimate. The second point is currency there is a currency.
Speaker Change: <unk>, which is pretty relevant and maybe I also take the liberty to answer that because I get a lot of questions. In the meantime here from from you guys. This seven five cents from 105 to 112 five and please don't ask me, where the dollar will be honestly I don't know I've given up on forecasting the dollar.
Speaker Change: We just took the midpoint between 110 and $1 15, that's why it sounds a little bit mathematical the seven and a half since translates into close to 400 million of revenue headwind for the second half.
Speaker Change: And translate into give or take $150 million to $170 million of segment result headwind for second half. So that's another impact and then lastly, I'd also set in.
Speaker Change: And to ensure there are in certain.
Speaker Change: Components standard power components, some price reductions on the industrial side also that is reflected in the margin guidance.
Speaker Change: Okay very clear thank you so much.
Speaker Change: Follow up I, just wanted to also understand a little bit to guesstimate on the tariff induced a reduction so what are you.
Speaker Change: <unk> for the September quarter for the various divisions are you expecting for instance, automotive to decline sequentially or if you could help us understand a little bit where they ask us just cutting from yes. So again, it's a it's a guesstimate I mean, we are all looking at the tariff uncertainty.
Speaker Change: As we said some carriers and I'm talking indirect tariffs some indirect tariffs have been announced in our life already others have been announced and taken away reciprocal tariffs retaliation. All these things are uncertain. Therefore, we do not have any mathematical.
Speaker Change: <unk> calculation behind this haircuts and to be also transparent 10% of Q4 translates into give or take 400 million euros of.
Speaker Change: The revenue haircut, so no mathematics behind it it's not visible in our order book, we do not see it in our numbers, we do not get a clear messages from our customers that they are postponing or canceling orders. It is a guesstimate.
Speaker Change: Could also has been 5% to be honest.
Decided to give you 10% you have now full transparency, both on currency and on our haircut with regard to revenues.
Speaker Change: You will have lots of intelligence to deal with it.
Speaker Change: And put it accordingly into your models nothing else than that is included we think it's a derisking of this year's guidance.
Speaker Change: No I think thats very very tight and very clear and I think it's I think it's I think brands, which Doug.
Speaker Change: Maybe my final question on AI.
Speaker Change: I just wanted you to know issue because you haven't really talked about your guide for this year for next year. So are we still on track for 600 million for this year and is the 1 billion sort of achievable next year in spite of FX. So should we assume that also because of FX.
Speaker Change: Yes.
Speaker Change: This is speaking to the Hello.
Speaker Change: Carlos already short.
Speaker Change: We absolutely confirm the 600 million prediction for the running year.
Speaker Change: As in <unk>.
Speaker Change: Powering AI, so we do that from what we call the grid to the core we in the meantime, occupy all the meaningful steps in between us or talking about this powerful also from the AC to DC converter switch mode power supply over the intermediate bus converter Johan commented on this.
Two what's then.
Speaker Change: Powering the core processors and within that.
Speaker Change: We have a sustainable differentiation potentially going forward optimizing with GPU makers, but also serve a wreck make us and data center.
Speaker Change: Our operators.
Speaker Change: The power efficiency and those of power density in a given the AI data centers, which are in fitness simply excelling, so having said that.
Speaker Change: Full confirmation.
Speaker Change: And did you.
Speaker Change: Sorry go ahead, because I just wanted to add something to your previous question, where do you have a follow up to Andreas. Please go ahead.
Speaker Change: No just on the $1 billion for next year I think last quarter, you said that that's very much.
Speaker Change: I wouldn't say in the bag, but that's sort of realistic ambition is that is that still the case.
Speaker Change: Yes, we reconfirm the billion.
Speaker Change: Okay. Thank you and now my small addition, because I forgot to mention that on the segment result in gross margin effectively also one last comment on on guesstimates and potential effect I think we should also be realistic I mean this is a guesstimate as I said.
Speaker Change: The later it comes.
Speaker Change: The smaller it gets the more upside we have on our mid mid teens segment result margin to be also very clear and transparent on that level.
Speaker Change: That's incredibly clear and really appreciate all the work you've done there to make our life a bit easier. Thank you.
Menno: The next question comes from Menno <unk> generally done Jefferies. Please go ahead.
Menno: Hi, good morning, Thanks for taking the question I just wanted to go back to the Q4.
Menno: Fiscal Q4 outlook, let's assume that you don't get any kind of a tariff impact, which maybe unrealistic, but just looking at whale.
Menno: Order book is currently.
Menno: How would you expect.
Menno: Different.
Menno: Businesses to perform into Q4 would be.
Menno: I'm not asking for specific quarter on quarter guidance.
Menno: Bye bye business, but.
Menno: The maximum strongest momentum b in the automotive division into Q4 based on your current visibility.
Menno: Or would it be a continuing rebound in.
Menno: In industrial both GIC and yes. It is.
Menno: Well as an AI I mean, just qualitatively can you tell me based.
Speaker Change: Based on your current visibility.
Menno: Q4 is looking like.
Menno: Yes, Jonathan Thank you further question so again.
Speaker Change: It's difficult to predict but if we just go back to a normal seasonality for an unaffected quarter or second half you would usually see a stronger growth momentum for automotive and for PSS.
Speaker Change: <unk> inventory digestion is abating, but still going on and she is S has different dynamics as you know so I would probably answer with in a normal quarter unaffected auto and PSS.
Speaker Change: Understood.
Speaker Change: And on.
Speaker Change: On the on the GI B price spreads yeah.
Speaker Change: It appears to me that you know.
Speaker Change: This is not going to go away because Chinese.
Speaker Change: Competitors are predominantly.
Speaker Change: Competing with you in the power discrete side, especially <unk>, then going forward, possibly silicon carbide and.
Speaker Change: And some of your non Chinese competitors are also likely to be trying to get some share there.
Speaker Change: How do you see that.
Speaker Change: And besides dealing with that in the longer term not so much what's the FY 'twenty five outlook, but 'twenty six 'twenty seven.
This is something you'll have to deal with on an ongoing basis as there is there any action our strategic approach that you can take to sort of mitigate this effect on overall infineon the number going forward.
Speaker Change: Yeah. Thanks for the question I try to answer I think we have to segment that market more there are clearly products, which we call. Our standard power semiconductors are taken and IGT. Our also our silicon carbide device in a tier 247, where differentiation.
Speaker Change: Asian becomes more challenging if it comes to a high reliable.
Our high reliability modules the game looks very different and this is what you need for example for Es as ore, but also far for transmission. So here, we can clearly differentiate ourselves in the market by the package.
Speaker Change: Right.
Speaker Change: On the front of that and the technology side.
Speaker Change: We are in in terms of our silicon.
Speaker Change: Silicon carbide MOSFET, one or two generations ahead of competition.
Speaker Change: When it comes to our area efficiency and and figure of Merit for Silicon carbide MOSFET and by the way. The same is true for Silicon MOSFET, where I had one or two generation. So we have to segment that market and some.
Speaker Change: Set market segments like for example, as solar residential inverter build up by discrete.
Speaker Change: Is probably not an area for us to play, but when it comes to a higher reliability.
Speaker Change: And the higher perf high performance application, we clearly have a right.
Speaker Change: To play and just case in point as you asked also for the overall.
Speaker Change:
Speaker Change: Effect on Infineon, which of course is a highly.
A good part is automotive.
Speaker Change: Our revenue in China for automotive for year over year grew double digit.
Speaker Change: Automotive revenue, China year over year grew double digit.
Speaker Change: And that includes also the whole portfolio.
Speaker Change: Okay, Yeah, I'm, assuming that this effect will be much more on your industrial business than on your automotive business in general because in automotive higher reliability.
Speaker Change: <unk> performance plays out but don't underestimate.
Speaker Change: The requirements in power infrastructure.
Speaker Change: The more renewables come into the net into the grid.
Speaker Change: The more demanding the application becomes a.
Speaker Change: Effects like grid shaping.
Speaker Change: Played a role.
Speaker Change: So we expect there is a good part of the market where.
Speaker Change: We can play our offshore wind right same thing in China.
Speaker Change: Maintenance of offshore wind is difficult.
Speaker Change: Understood. Thank you very much.
Speaker Change: Yeah.
Stephane Houri: The next question comes from Stephane Houri Auto BHF. Please go ahead.
Speaker Change: Yes good.
Speaker Change: Morning, everyone actually I had a question on the.
Speaker Change: Comments about the end of the inventory correction, notably in.
Speaker Change: In the automotive space can you maybe remind us what is the current level of inventories in terms of number of weeks at your automotive customers and do you see.
Speaker Change: The automotive market, let's say stabilizing everywhere in terms of geography, but also.
Speaker Change: In terms of mix versus hybrid IC because they are can you maybe give us some.
Speaker Change: Overview about what's happening there.
Speaker Change: So.
Speaker Change: The inventories at customers are difficult.
Speaker Change: To state we can share with you that our overall inventory in our distribution channel is very much on target, we have targeting 10 to 12 weeks and.
Speaker Change: And we are at the upper end of 12 weeks and automotive is not really an exception to that but very much.
Speaker Change: In line.
Speaker Change: On the inventories beyond that meaning at the tier ones that we do not really have transparency, we call of course, our major customers get indications and from that we have derived our.
Speaker Change: Statements, which I made in the.
Speaker Change: Introduction that we see.
Speaker Change: Ah things coming to a normal level.
Speaker Change: In some areas.
Speaker Change: That's of course, an average statement in some areas it's already in there.
Speaker Change: Let's say risky territory because some.
Speaker Change: Tier ones of course under cash constrains manage their inventory further down in other areas it might be a little bit higher but the average is as normal.
Speaker Change: Therefore, we also see that our automotive business now in the last quarter picked up especially currency.
Speaker Change: Neutral or.
Speaker Change: At the same currency.
Speaker Change: Okay and regarding China is there anything specific happening in the Chinese market, which has been driving the growth while the others were.
That's it.
Speaker Change: Negative so far on automotive I think you have seen the latest number for April in China. The market is there and we are paced dissipating.
Speaker Change: A nice way I just mentioned in the previous question that our automotive revenue.
Speaker Change: <unk> grew double digit year over year in the quarter. So we are participating we are exposed to the right.
Speaker Change: Oems I think we made it public in the past.
Speaker Change: We have a broad coverage.
Speaker Change: So I'm very happy with the development I see there anything to add Andreas yes, just to build on what Jan has been saying so as a matter of fact, the talking about China.
Speaker Change: In the automotive sector, we continued to increase ultra market share to 13 spot nine percentage points. So you can see it also in the market here.
Speaker Change: This revenue growth as a result of many many things including portfolio breadth, our ptos approach reliability commitment and a couple of other subject us that play into the equation.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you very much.
Speaker Change: The next question comes from Joshua <unk> TT Cowen. Please go ahead.
Speaker Change: Hey, guys. Thank you for taking my question for my first one I wanted to ask you about the auto MCU business and it showed another year of very meaningful.
Speaker Change: <unk> share growth I think you hit 32% I mean, how much further kidnap how are you, reaching the point, where either the market getting pretty saturated.
Speaker Change: More concentrated than usual or do you think theres more room to run on the auto MCU share gains side, given your investments in an S. T V. In York family. Thank you.
Speaker Change: Yeah, you know probably that this story dates back many many years. So the design wins, we harvest today date back three five years in case of platforms.
Speaker Change: I do expect some some further gains but of course always keep in mind that of FX and inventory effects can.
Also the numbers.
Speaker Change: We are just in the transition.
Speaker Change: From the 65 nanometer.
Speaker Change: Generation two the 40 nanometer generation and the Big design win step function took place in the 40 nanometer generation.
Speaker Change: So I think we have still a.
Speaker Change: Good runway where.
Speaker Change: Exactly.
Speaker Change: Reach is very difficult.
Speaker Change: To predict.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you and I apologize, it's early here, but I'm a little confused on the gross margin.
Speaker Change: Half over half direction.
Speaker Change: I mean, it looks like revenue is going to be up sort of high single digits. You mentioned, how you've made basically maintained the guidance.
Speaker Change: Despite the 10% haircut, so I can't imagine there is a huge change in volumes there.
Speaker Change: Could you is there a currency impact on the Cogs line I know you gave the rule of thumbs up from on revenue and operating income.
Speaker Change: But yes, I noticed you made a little bit confused as to why gross margin is going to be down sort of under 150 basis points half over half. Thank you.
Speaker Change: Yes, Justin.
Speaker Change: Take the questions of course, you are an expert.
Speaker Change: It's in a round number so you can look at and around from the north or from the south and tier to the to be fair I would say the second half is probably more looking from from the northern perspective to the 40%, whereas the first half is more from a northern perspective, the second half.
Speaker Change: Our haircut comes in Materializes is then maybe looking a little bit more from the south to the 40% for the full year. It still remains around 40, that's our current view, but you are right. There are a couple of our sites, which are also benefiting of course from from lower costs in U S dollar but that.
Speaker Change: Is factored in in our rule of thumb 10 on the scent for for the profitability and 25 on a cent per quarter on revenue.
Speaker Change: Okay. Thank you.
Speaker Change: The next question comes from Sandeep Deshpande of Jpmorgan. Please go ahead.
Speaker Change: Yeah, Hi, Thanks for letting me on I have a question actually following up to that in the earlier question on pricing, but actually related to automotive I mean, one of your big U S. Competitors has talked about using pricing as a lever to keep their share or grow their sad I mean, I'll be going back to the bad old days in semiconductors, and particularly in the automotive.
Speaker Change: In semiconductors, where they seem to be wanting to keep their share.
Speaker Change: In terms of pricing and how does that how are you thinking.
Speaker Change: In this game being played out.
Speaker Change: Yeah.
Speaker Change: Sandeep in automotive.
Speaker Change:
Speaker Change: You know most of it is under annual price agreements and they came in as exactly as we.
Speaker Change: We are predicted.
Speaker Change: I mentioned in the intro there is a specific area of silicon carbide, where prices are coming down but please keep in mind.
Speaker Change: That's a very good extend his forward pricing.
Speaker Change: The substrates are becoming a commodity which is beneficial for us.
Speaker Change: And the.
Speaker Change: The eight inch transition is in roll out for all market participants.
Speaker Change: Typically it's a situation where forward pricing is applied but remember we also have other means in our hand the extension of.
Speaker Change: More and more volume now coming out of a cool them and at the same time, our leading edge.
Speaker Change: Technology.
Speaker Change: The trench.
Speaker Change: He can carbide trench, so I do not see it as a general automotive pricing.
Speaker Change: The behavior change.
Speaker Change: And I don't know exactly what this competitor has.
Speaker Change: In mind.
Speaker Change: Understood.
Speaker Change: I'll follow up on the your business with the Hyperscale guys et cetera.
Speaker Change: Dan you clearly gained more share than you expected in the first half of the year because of how the shad mcgeeney ourselves in some of your other competitor is laid out in the platform.
Speaker Change: From what we're hearing through the supply chain that Chad between yourselves and the company is going to change somewhat into the second half of the year is that going to play out and the other avenue that means that going back to your revenues into the second half of the year at all.
Speaker Change: So it's all within our what we've been stating before so we are about to grow the revenue towards the 600 million so coming from $400 million in the previous year.
Speaker Change: Our next year, we are go through what's the billion.
Speaker Change: So having said that obviously, we are gaining share in that growing market against competition.
Speaker Change: So I can just reiterate what has been said before last year 250.
Speaker Change: Not Florida.
Speaker Change: So.
Speaker Change: Growing and.
Speaker Change: Yes, Theres always some noise Sunday, but.
Speaker Change: Rest assured.
Speaker Change: We will deliver.
Speaker Change: Thank you.
Speaker Change: Yeah.
The next question comes from Jakob Bluestone Bnb Paribas. Please go ahead.
Jakob Bluestone: Hi, Thanks for taking the question.
Speaker Change: I had a question on the Capex guidance.
Jakob Bluestone: Next by $200 million.
Jakob Bluestone: Is that just currency or are there areas, where you're scaling back in anticipation of the potential tariff effects. Thanks.
Jakob Bluestone: Yes, Hi, Jakob sweating yourself.
Jakob Bluestone: There is a minor currency effect that the bigger one is push outs of major front end buildings.
Jakob Bluestone: Into our next fiscal quarter that relates mostly to address and cool them and if you want.
Jakob Bluestone: Split of the $2 three ballpark very rough a bit more than a billion is maintenance and the capitalization a good half is for for the front end.
Jakob Bluestone: Buildings and a good half is for capacity growth the latter mostly around AI and wideband can.
And maybe let me add to this I mean.
Jakob Bluestone: We talked about the tariff effect, we don't know how it will play out we would.
Jakob Bluestone: I would still consider them.
Jakob Bluestone: Jason module for a.
Jakob Bluestone: Yes.
Jakob Bluestone: <unk>, because we would foresee if then the terrorists will play out in the way of a delayed upturn, but mid to long term of course, our structural growth drivers kick in likely AI topic, we just discussed and therefore, it's more of a let's say.
Jakob Bluestone: Detailed timing question now one exactly we ramp up of Dresden, and in which a modular steps rather than.
Jakob Bluestone: Any.
Jakob Bluestone: Second thought on whether we need the module at all we need it.
Jakob Bluestone: And we will ramp up according to demand in a modular way.
Jakob Bluestone: Understood. Thank you.
Jakob Bluestone: The next question comes from Andrew Gardiner City.
Jakob Bluestone: [noise]. Your line is open Sir you May proceed with your question.
Speaker Change: Hello can you hear me.
Speaker Change: Yes, Andrew we hear you.
Speaker Change: Sorry about that and I had one on the just on the outlook and how you're perhaps managing between what youre, telling us in terms of the financial communication in the actual <unk>.
Speaker Change: Operations.
Speaker Change: Really appreciate you trying to Derisk numbers for this year I think we all appreciate that relative to the approach some of your global peers have taken but when you've got ordered actually increasing and customers aren't actually changing anything yet are you youre factoring in an underutilization charge in the guidance that youre, giving us but are you actually slowing the fabs.
Already is there how are you managing that that that risk.
Speaker Change: Can tell us that you are taking a guess in terms of.
The communication to the market, but it's obviously much more difficult more risky for you to just take a guess as to how to actually manage the fab loading in your production yeah very good question and we are preparing measures for the summer Ah to potentially reduce our loading further we will.
Speaker Change: Surf the order entry for the next let's say two three months and then we still have actions.
Speaker Change: Is it time to act and of course, our higher inventory levels also help us.
Speaker Change: To balance any any short term.
Speaker Change: Movements, but it's a bit of a challenge you're spot on.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: The next question comes from Matthew from HSBC. Please go ahead.
Matthew: Yes. Good morning, Thank you for taking my questions. So firstly.
Matthew: Just thinking through the thinking about the underlying guide you upgrading your guide excluding the impact from tariffs and FX. So I just wondered if you could give us some color on which end markets.
Matthew: This underlying upgrade are you where are you seeing better trends than you expected.
Matthew: Maybe a quarter or two ago.
Matthew: And then just as a follow on to the previous question. If your tariff assumptions turn out to be conservative say midway through the quarter. How quickly can you ramp up production to meet demand.
Matthew: And any color around that would be great.
Matthew: How do you take your first question Hello, So I mean, let's go back again to what we have done engie picked it I mean, if you if you just take a no currency and nor haircut.
Matthew: We would be in line with the previous guidance and even with the currency change we would still be around lost times guidance. So I do not think thats an upgrade it's a confirmation.
Matthew: The of the previous guidance without the tariff haircuts and is just a confirmation of what we said from November onwards that there is this modest recovery in our key end markets in the second half once the inventory digestion has happened that's how I would characterize.
Matthew: The guidance and the and the upgrade.
Matthew: And on the second question is basically the other side of the question that has been us just before.
Matthew: If we are too conservative on this assumption on the on this estimate of the tariff impact.
Matthew: And then of course.
Matthew: We would need to continue with our loading.
Matthew: And here of course, we have several means in our hand mill going from overtime budgets, where we can ask our colleagues to stay at home or come in.
Matthew: We could also make use of the German scheme of.
Matthew: Hum.
Speaker Change: Short time work. Thank you.
Which is also rather flexible.
Speaker Change: So I think we have a lot of our ways to manage the loading but it's as I've said before it's a bit of a challenge.
Speaker Change: Understood maybe just as a quick follow up on Silicon carbide.
The BYD announcement around the megawatt charging I just wondered if you're seeing any additional interest in six design wins picking up.
Speaker Change: From customers for fast charging.
Speaker Change: Yeah.
Speaker Change: Yes, I think the the presentation of BYD is interesting even though it's a first of all in the topic of the of the battery and of course of the infrastructure.
Speaker Change: We offer also 570 800 volt silicon carbide MOSFET, whether it be this becomes mainstream we need to see but the value proposition of silicon carbide is fully intact even without.
Speaker Change: That topic and.
Speaker Change: For a battery electric vehicle, it's a the choice and the we see it.
Speaker Change: Fast.
Speaker Change: Quickly being adopted.
Speaker Change: Across the globe got it thank you.
Speaker Change: Understood. Thank you.
Speaker Change: In the interest of time, we kindly ask you to limit yourself to one question and the next question comes from Lee Simpson Morgan Stanley.
Lee Simpson: Thanks for squeezing me in so let's keep it to one question and maybe I'll just ask one product development. We've had a lot of questions already on a on the tire thing I thought was quite interesting you you've mentioned a couple of developments there.
The piece of especially the working cap.
Lee Simpson: It looks quite interesting could you maybe just surmised stress what the end markets would be it does look as though physically I might be something you are considering and then maybe just associated with product development.
Lee Simpson: We'd writing assuming that you've done Super junction for quite some time, but trench.
Lee Simpson: Super Junction here for Silicon carbide that looks like.
Lee Simpson: First for the market and did you say 800 volts, and it's not really being targeted at China.
Lee Simpson: So I take your question even though.
Lee Simpson: <unk> raised.
Lee Simpson: The topic of Super junction so indeed.
Speaker Change: We are coming out with our first Super junction trench combination for Silicon carbide, which I believe propels US ahead, because combining trends and Super junction is the perfect match, if you add super junction to planar or are other constructions. It doesn't add so much.
Speaker Change: Benefit. So we are very enthusiastic about the capabilities of this capability of this sell and we will also communicate to you more into the market.
Speaker Change: Soon again contributing to the mantra, we stay ahead in terms of.
Speaker Change: Cell.
Speaker Change: Generations compact.
Competition, whether they are based in the east or in the west in terms of a piece of our Cam sense, that's a very interesting IP.
Speaker Change: So far we used it for capacitive sensing. So if you think about for example, your major home appliances at home.
Speaker Change: Likely they use this technology, but you might also have.
Speaker Change: We have experienced a situation where you have a wet hands and then these are capacitive based.
Speaker Change: Buttons do not work and Thats why were working for a while on inductive, which.
Speaker Change: Where you can.
Speaker Change: Then.
Speaker Change: Use it also perfectly with with wet hands to give you a very practical example, and also we are using this technology now for liquid.
Speaker Change: Our level of sensing there are many industrial applications, where you need to know the level of liquid.
Speaker Change: Given a box or whatever.
Speaker Change: And that's also a very nice application. So we offer now inductive and capacitive.
Speaker Change: Sensing and so and wants to add to R&D. Please go ahead, probably triggered the question I also need to contract with them. So therefore, Lee just to add this.
Type of initiative as we said as initiatives to structurally improve our competitiveness, but on the other hand.
Speaker Change: It should by no means.
Speaker Change: Damage, our innovation strength of pipeline and so I think thats a this quarter is a very good example, where on the R&D, we keep investing into the right profitable growth buckets, whereas on the SG&A side you see the first impact so I think that's a pretty relevant.
Speaker Change: Great. Thanks for the clarification, and they're well down in the quarter.
Speaker Change: The next question comes from <unk> stop with <unk> capital. Please go ahead.
Speaker Change: Yeah, Hey, everyone and thanks for taking my question one on the on the fab loading where you're standing right now in both your front and backend Fabs and the whole do you see your fab loading moving into the second part of the year.
Speaker Change: Given your assumption for the plan and the 10% that yet thank you.
Speaker Change: Tableau Wooding Sebastian in the seventies and in the high Sixty's.
Speaker Change: Answer to the first question.
Speaker Change: Front end and backend.
Speaker Change: Our front end and back again.
Speaker Change: And for the second part of the year, where do you see the leukemia trending that depends now on whether this a guesstimate materializes or not if it doesn't materialize I think it will gradually.
Speaker Change: Slight slightly gradually go up but of course if.
Speaker Change: This effect happens as outlined by bias when we might have to adjust the loading but that's incorporated in the guidance. So we have taken out the $400 million in Q4.
Speaker Change: Including then the higher Underutilization charges.
Speaker Change: Therefore on the Underutilization charges, Sebastian we said 1 billion give or take.
Speaker Change: So we had to now include more into Q4 than previously. So therefore, the split has changed also a bit now it's give or take 55% first half 45 second half, but last time I said 60 40. So you see here this shifts coming from the haircut related.
<unk> idle in Q4.
Speaker Change: Okay. Thank you.
Speaker Change: Ladies and gentlemen that was the last question I'll, let Dan I would like to turn the word over to Alexander <unk> for closing remarks.
Speaker Change: Thanks, everyone radio Infineon will go off the wires for today, but we are certain you will remain tuned in.
Speaker Change: For doing so and any further questions. Please feel free to contact the IR team here in the Munich studio take care Good day and good luck.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].