Cypress takeover brightens up Infineon outlook

May 05, 2020 //By Christoph Hammerschmidt
Cypress takeover brightens up Infineon outlook
In the wake of the Corona crisis, Infineon has revised its revenue expectations downward. The weakness in demand in the automotive sector in particular is having an impact. However, the acquisition of the U.S. chip manufacturer Cypress Semiconductor, which was completed in April, will more than offset the decline.

For the just completed second quarter of the 2020 fiscal year, semiconductor manufacturer Infineon reports revenues of Euro 1,986 billion, practically the same level as in the prior-year quarter. However, earnings declined by 17% to Euro 274 million due to the overall significantly lower utilization of production capacity. In the important area of automotive products, profits even slumped by 54%. By contrast, the Industrial Power Control business remained comparatively stable with a drop of only 7%. The Power & Sensor Systems division made 5% more profit, and in the Digital Security Solutions division profits even rose by 21%.

Company boss Reinhard Ploss blamed the weak performance on the corona pandemic. "The world is in the midst of an unprecedented crisis," said Infineon CEO Reinhard Ploss. "The effects of the corona virus pandemic are unprecedented and the semiconductor industry is feeling them clearly. Infineon is also not immune to the massive downturn in the global economy". In this environment, the outlook for the second half of the fiscal year has deteriorated significantly for Infineon. Ploss expects a sharp decline in revenues, especially in the Automotive segment.

However, the Cypress acquisition is expected to more than offset the organic decline in revenues. Especially in the automotive electronics segment, Ploss hopes that the acquisition will expand its product portfolio and help it climb into the Olympus of the top ten automotive system manufacturers. The Cypress businesses will be integrated into Infineon's respective segments. Overall, Infineon expects the Cypress integration to contribute Euro 0.8 billion in revenues for the current fiscal year. Ploss predicted that the combined company's total revenues will thus increase to Euro 8.4 billion.

Related articles:

Acquisition of Cypress Semiconductor by Infineon finally approved

Infineon: Weak automotive business, but positive outlook

Corona leaves trail of devastation in the automotive industry


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