Infineon delays Kulim fab expansion
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The semiconductor downturn will see Infineon Technologies postpone the second phase of its ‘megafab’ in Kulim, Malaysia, and cut investment by 10%.
“The cyclical weakness continues and the recovery in many of our end markets is sluggish,” said Jochen Hanebeck, CEO of Infineon. “At Kulim we can meet demand from the first module and 200mm wafers so we will postpone further cleanroom capacity.”
This comes as part of a 10% reduction in investment announced with the 2024 financial results and the continuing job cuts which will be implemented in the next few months.
Infineon opens €2bn Kulim power fab
“Currently, there is hardly any growth momentum in our end markets except from AI, and the cyclical recovery is being delayed. The inventory correction is continuing. Short-term ordering patterns and inventory digestion are clouding visibility on demand trends beyond the next couple of quarters. We are therefore preparing for a muted business trajectory in 2025.”
Revenue for the year was €14.955 billion, down 8% on 2023 with profits of €3.105bn, down 28% from €4.33bn. Free Cash Flow was just €23m, with $1.65bn spent on the acquisition of GaN Systems and the fab developments at Kulim and Dresden.
“Automotive increased 2% in 2024 but the lessons from the last allocation phase seem largely to be forgotten,” he said. “The boom was two and a half years which was very long, building inventory, but the critical question is to what extent the inventories will be digested. Will there be a shortage when the upturn comes or have the market participants learned? The reduction [in orders] is very pronounced so I can only wait, especially with products with a long cycle time such as microcontrollers.”
“For 2025 automotive production will be flat and outside china will be sluggish,” he said. “We are expecting inventory corrections over the next six months. There are customers with a cash focus who are reducing inventories and that will grow. For the second half the final sales of cars will only be slightly better. In this dynamic environment visibility is very difficult because of the inventory adjustments.”
However the data centre power business is booming, and Haneback points to recent 300mm GaN wafer and thinner wafer developments as key for the future growth.
“Investment in AI datacentres remains high which will drive the power supply business to double to over €500m and we expect to reach €1bn in two years,” he said.
It is too early to assess the impact of any increase in tariffs for the US, he says. “There are public statements on the increase in tariffs and a more strict attitude to China but exactly what form this would take its too early to say. The basic idea is that our manufacturing footprint is primarily in Europe and SE Asia but its still too early to say.”
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