“A broad range of structural trends will drive growth in the coming years: electro-mobility, renewable energies, factory automation, data centers and a steadily increasing number of battery-powered, connected devices,” points out Dr. Reinhard Ploss, CEO of Infineon. “Thanks to our leading technologies and differentiated manufacturing expertise, we have established an excellent position in the markets in which we operate. We are determined to exploit the opportunities that result from this and, accordingly, apply a rigorous approach to investing. Our current plans are aimed at providing the necessary level of manufacturing capacity to meet expected growth. It is currently forecast that, by the middle of the coming decade, more than half of the power semiconductors produced by Infineon will be manufactured on 300 mm wafers (in Dresden/Germany and Villach/Austria).This will enable us to improve our profitability further, despite higher depreciation expense”.
In view of the current strength of the order book and based on a euro/US dollar exchange rate of 1.20, Infineon expects revenue to grow at least in the coming 2019 fiscal year by a minimum of 10 percent. For the fiscal years following this accelerated growth period, Infineon assumes that revenue will grow at an average annual rate of 9 percent (previously 8 percent).
Given that this superior growth is being driven in particular by strong demand for power semiconductors – an area in which Infineon’s in-house manufacturing capabilities provide a competitive advantage – it is necessary to adjust the investment-to-sales ratio:
Due to the increased investment activity, Infineon expects depreciation of property, plant and equipment in relation to revenue to increase by approximately three percentage points over the next five fiscal years.
However, by increasing the share of cost-efficient 300 mm manufacturing and further measures, the gross margin is projected to be maintained at the level of the 2018 fiscal year.
In addition, Infineon plans to gradually improve the segment result margin from its current target level of 17 percent by ensuring that operational expenses rise at a lower rate than revenue.
Selling expenses are expected to increase by 90 percent of the rate of revenue growth, while general and administrative expenses are expected to increase by 60 percent of the rate of revenue growth.