It could actually be a wonderful time for semiconductor manufacturers. Global demand for chips is currently significantly higher than supply, said Reinhard Ploss, CEO of Infineon, on Tuesday. And it will remain so for a long time to come. But the Munich-based chip company couldn’t profit massively, at least not in the short term. Because Infineon itself has production issues. In Malaysia, production had to be completely halted for almost three weeks, mainly due to the increase in corona infections, and Infineon employees are now reportedly vaccinated there. In the United States, the Texas plant had to shut down for a long time due to a storm, but it has now been able to be brought back to normal.
There is currently a great shortage of semiconductors around the world in almost all industries. On the one hand, there are production issues all over the chip industry, and on the other hand, demand is high due to the rise in digitization, especially during the pandemic. Computers, cell phones, game consoles, household appliances and many other products are in high demand. The auto industry is also hit hard. In addition, the need for semiconductors in electric vehicles and autonomous driving is significantly higher than in conventional cars.
Almost all of the major manufacturers have already had to halt production, including Volkswagen, Daimler and BMW. Experts assume that due to the chip shortage, a total of around five million fewer vehicles can be produced by 2021. “Semiconductor shortages in particular are likely to persist for some time,” says Oliver. Falck, head of the Ifo Center for Industrial Organization and New Technologies. Manufacturers’ stocks of finished cars are low. Infineon is the world’s largest supplier of semiconductors for the automotive industry.
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Reinhard Ploss, 65, has been CEO of Infineon since 2012.
(Photo: Matthias Balk / dpa)
The production problems at Infineon itself are now also reflected in the numbers: In the fiscal third quarter, which ran from April to June 2021, sales and profits increased only marginally. In total, sales increased by 22 million to 2.722 billion euros compared to the previous quarter. Profit rose from 209 million to 245 million euros. “Inventories are at their lowest, our chips are moving straight from production to end use,” Ploss said. “In this environment, the production restrictions linked to the pandemic, as recently in Malaysia, weigh twice as much. “
In the current quarter, Infineon now expects better business and stronger sales growth to 2.9 billion euros as well as more profits. Overall, Ploss expects annual sales of eleven billion euros and a profit margin of over 18%. In terms of sales, Infineon is the largest chipmaker in Europe, ahead of STMicro and NXP. After a brief period of weakness, the stock was virtually unchanged on Tuesday, and Infineon is worth more than € 43 billion on the stock market.
Carinthia plant opens in mid-September
“We are currently doing everything we can,” said Jochen Hanebeck, production manager on the Infineon board. The new factory in Villach, Austria will open on September 17th. Infineon decided three years ago to massively expand its production there. And invested 1.6 billion euros, the largest private investment in Austria. “The timing couldn’t be better,” Ploss said happily. At present, the employees are urgent for the Carinthia site. The Munich-based company also has a large site in Dresden and a production site in Regensburg.
On speculation that Infineon could possibly build a plant in Germany with Taiwanese supplier TSMC, the world’s largest independent manufacturer of semiconductor products, said Ploss: “It would be an interesting consideration to have TSMC in Germany. The company manufactures on behalf of other chip suppliers, so it does not develop them itself – Infineon is already working with the Taiwanese. The background is that European Commissioner Thierry Breton wants to bring more chip factories back to Europe. About ten percent of the world’s semiconductors are currently made here, the target is now 20 percent. Many criticize the great dependence on Asia and the United States. Intel is also planning to manufacture in Europe. Ploss said that in Europe, semiconductors are primarily needed for automakers, other industries, and healthcare. But Intel doesn’t make them.