Infineon: Weak automotive demand will not improve in the short term-EEWORLD

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On November 12, Infineon Technologies AG announced its financial report for the fourth quarter of 2019 (ending September 30, 2019): revenue increased by 1% year-on-year (2% quarter-on-quarter) to 2.062 billion euros; the divisional profit margin (the operating profit margin indicator preferred by management) was 15.1%, lower than 15.7% in the third quarter and 19.5% in the fourth quarter of last year; net profit increased by 14% year-on-year (down 28% quarter-on-quarter) to 161 million euros.

Infineon Technologies CEO Reinhard Ploss (pictured) said in a financial report press release on November 12 that Infineon is feeling the impact of weak global automotive demand and does not expect any improvement in the short term. He said the overall economic environment is still full of economic and political uncertainties and the market is not expected to recover before the second half of the fiscal year.

Ploss also mentioned that Infineon achieved its fourth-quarter targets and put a good end to a challenging fiscal year, with particularly strong demand for power semiconductors related to renewable energy applications and sensors for consumer devices.

Based on an exchange rate of 1 euro to 1.13 U.S. dollars, Infineon estimates that its revenue in the first quarter of 2020 will decrease by 7% quarter-on-quarter (plus or minus 2 percentage points); based on the midpoint of the revenue forecast, the divisional profit margin is expected to drop from 15.1% in the fourth quarter of 2019 to around 13%.

Infineon Technologies also expects revenue to increase by 5% (plus or minus 2 percentage points) in 2020, and the full-year divisional profit margin is estimated to be 16% based on the midpoint of the revenue forecast. This financial forecast is based on the assumption that the euro will remain at 1.13 against the US dollar until the end of the fiscal year.

In 2019, Infineon's revenue increased by 5.7% year-on-year to 8.029 billion euros, and the department's profit margin fell from 17.8% in 2018 to 16.4%.

As of the end of the fourth quarter, Infineon's inventory amount increased by 14.9% year-on-year (down 3.2% quarter-on-quarter) to 1.701 billion euros.

In terms of regional revenue in the fourth quarter of 2019, sales in the United States increased by 5.3% year-on-year (6.9% quarter-on-quarter) to 217 million euros, and sales in China increased by 9.4% year-on-year (6.2% quarter-on-quarter) to 585 million euros.

Texas Instruments: Automotive market business also plummeted

As another auto giant, Texas Instruments also had poor third-quarter results. Data showed that the company's revenue, net profit and earnings per share all declined year-on-year, with revenue down 11%. Affected by the performance, the stock fell nearly 10% after the market closed. As of 7:12 Beijing time, it fell 9.92% to $115.82.

According to the financial report, in the third quarter, the company's revenue was US$3.771 billion, down 11% from US$4.261 billion in the same period last year; operating profit was US$1.589 billion, down 18% from US$1.937 billion in the same period last year; net profit was US$1.425 billion, down 9% from US$1.57 billion in the same period last year; earnings per share were US$1.49, down 6% from US$1.58 in the same period last year.

Rich Templeton, chairman, president and CEO of Texas Instruments, said the year-on-year revenue decline was due to further weakness in most markets. In the company's core business, analog business revenue fell 8% year-on-year, and embedded processing business fell 19%.

Texas Instruments expects fourth-quarter revenue of $3.07 billion to $3.33 billion and earnings per share of $0.91 to $1.09, including about $5 million in individual tax benefits. At the same time, it still expects an annual operating tax rate of about 16% in 2019.

According to Texas Instruments, the company's revenue decline was due to a decline in power, signal chain and high sales. Analog revenue fell 8% in the same period last year. Embedded processing revenue fell 19% from the same period last year due to a decline in product lines, processors and connected microcontrollers. All markets in the embedded market declined, but the decline was most significant in the automotive and communications equipment markets. Other products fell 19% from the same period last year due to DLP and custom ASICs.

Looking back over 30 years, semiconductor cycles can vary widely, but typically experience four to five quarters of year-over-year declines before returning to positive growth. We have also said that current trade tensions could impact the depth and duration of the cycle. We offer these thoughts as commentary, not as a forecast for the current cycle.

They further noted that Industrial, Automotive, and Personal Electronics were all down single digits from a year ago as nearly all 28 segments within those markets declined. In Communications Equipment, revenue was down approximately 35% from a year ago and down 20% sequentially. We saw weakness across all major customers, regions, and technologies. Finally, Enterprise Systems was also down year over year.

Reference address：Infineon: Weak automotive demand will not improve in the short term

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