Dresden, Germany – Infineon Technologies is significantly increasing its investment in manufacturing capacity for power semiconductors used in artificial intelligence (AI) data centers, signaling a broader trend of analog chipmakers responding to the surging demand driven by the global AI boom. The Munich-based company announced on , that it will boost its investment to €2.7 billion for the current fiscal year 2025/2026, up from a previously planned €2.2 billion.
The increased expenditure is primarily directed towards accelerating the expansion of its Dresden facility, which is now slated to begin operations ahead of schedule. Infineon anticipates a doubling of revenue from semiconductors for high-performance computing to €1.5 billion in fiscal year 2025/2026, projecting further growth to €2.5 billion in the following year. This would see AI-related revenue account for nearly 15 percent of the company’s total revenue, up from ten percent currently, according to Chief Financial Officer Sven Schneider.
“Growth in AI products is currently limited by a lack of production capacity,” stated Chief Executive Jochen Hanebeck. “The actual demand is higher.” The company is actively collaborating with its suppliers to address these bottlenecks and ensure a stable supply chain.
Automotive Sector Faces Headwinds
While the AI segment is experiencing robust growth, Infineon’s automotive business demonstrated more modest expansion in the first quarter of the fiscal year, increasing by only four percent. Hanebeck noted a trend of customers committing to longer-term orders, potentially driven by concerns that the strong demand in the AI sector could lead to capacity constraints affecting other product areas. “In parts, this seems to be due to the fear that the strong demand in the AI sector could lead to capacity bottlenecks for similar products in the non-AI sector,” he said.
Infineon announced on Tuesday the acquisition of parts of AMS-Osram’s sensor business for €570 million, a move intended to strengthen its position in the automotive market and gain access to emerging markets such as sensors for humanoid robots. Hanebeck anticipates that this acquisition will positively impact earnings and provide access to “future-oriented markets.”
First Quarter Results and Outlook
Infineon reported a seven percent year-on-year increase in consolidated revenue in the first quarter, reaching €3.66 billion, slightly exceeding the company’s own forecast. Segment earnings also saw a substantial increase, rising at twice the rate to €655 million. The segment result margin improved from 16.7 percent to 17.9 percent in the prior-year period.
Looking ahead, Infineon expects revenue of approximately €3.8 billion in the second quarter of the fiscal year, with a margin in the mid-to-high single-digit percentage range. For the full year, the company maintains its forecast of a margin in the high single-digit percentage range, with moderate revenue growth. This outlook does not include the impact of the AMS-Osram acquisition.
The announcement of these figures and projections was met positively by investors, with Infineon’s stock price rising 4.2 percent at the opening of trading on .
The investment by Infineon reflects a wider trend within the semiconductor industry, as companies race to meet the escalating demand for chips required to power AI applications. The focus on expanding production capacity for power semiconductors, essential components in AI data centers, underscores the critical role these chips play in enabling the continued development and deployment of artificial intelligence technologies. The company’s strategic shift towards prioritizing AI-related investments highlights the growing importance of this sector and its potential to drive future growth.
The situation also illustrates the potential for ripple effects across the broader semiconductor landscape. Concerns about capacity constraints in the AI sector are prompting customers in other industries, such as automotive, to secure long-term supply agreements, potentially leading to shifts in production priorities and inventory management practices. Infineon’s acquisition of AMS-Osram’s sensor business further demonstrates the industry’s ongoing consolidation and the pursuit of strategic partnerships to address evolving market demands.
