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Infineon: Industrial and Automotive business

Posted on Friday, Jun 20th 2008

By Vijay Nagarajan, Guest Author

We recently evaluated Infineon’s financials and the negative impact Qimonda has had on it. While it is facing difficulties offloading its Qimonda stake, the German chipmaker has done well in its two business segments. Let us take a quick look at the Industrial and Automotive business in this part.

The main products of this segment include power semiconductors, sensors and microcontrollers, silicon discretes, chip card and security ICs. Infineon’s ICs are used in power trains, body and convenience features such as air conditioning in your car, its safety features such as ABS, airbags and stability control, and its infotainment aspects. Industrial applications include power management and supplies, power generation and distribution, and industrial control. Customers include Avnet, Bosch and Siemens.

Market research firm Semicast reported that Infineon is the leader in the industrial segment ahead of STM and Renesas. Semicast estimates that Infineon has about 7.5% of the $20 billion industrial market. Further, this market is expected to grow to $33 billion in 2013 presenting Infineon with a good growth driver. Strategy Analytics ranks Infineon as the second largest supplier of ICs for automotive applications worldwide with about 9% market share. Additionally, Infineon is number one in the power semiconductors market with 6% share in 2006 according to an IMS research report.

Driven by the strong demand for energy efficient solutions, the industrial and automotive business will stay healthy. The company expects healthy growth rate in the industrial segment primarily based on its leadership position in power applications. It also hopes for roughly stable sales within its automotive business based on its ability to provide complete high quality semiconductor solutions integrating power, analog, mixed signal IC and sensor technology.

Like Semicast’s Colin Barnden notes, the challenge will be to hold on to the leadership position in the face of increased competition. The uncertain economy will make the stable industrial and automotive segment very attractive for semiconductor companies. The segment thus presents a good opportunity for Infineon subject to competitive risks. For the moment, I am willing to give Infineon the benefit of doubt that it will at least continue to maintain its market share here if not grow it modestly.

This segment is a part in the series : Infineon

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