IFNNY Q2 2025: Tariff Uncertainty to Cut Q4 Revenue by 10%
- Automotive Strength & Market Leadership: Management confirmed robust momentum in automotive—highlighting double-digit year-over-year revenue growth in China and a strong market position in auto MCUs with a 32% share, which underscores Infineon’s competitive edge in high-reliability automotive semiconductor products.
- Promising AI Revenue Outlook: Executives reaffirmed their commitment to AI growth by confirming the target of EUR 600 million for the current year and a realistic ambition to achieve EUR 1 billion in AI-related revenues next year, reflecting confidence in their innovative power solutions across data centers and related applications.
- Operational Agility Amid Uncertainty: The management demonstrated proactive measures in addressing tariff risks and capacity utilization—emphasizing flexible fab loading strategies and short-term operational adjustments to manage potential underutilization charges, which positions the company well to adapt to market volatility.
- Tariff Uncertainty and Revenue Headwinds: Executives guesstimated a 10% Q4 revenue reduction due to tariff-related impacts, yet they noted these impacts aren’t currently visible in the order book. This uncertainty could pressure both revenue and margins if tariffs materialize more severely than expected.
- Adverse Currency Effects and Pricing Pressure: The guidance now factors in a shift in the USD/EUR exchange rate from $1.05 to $1.125, translating to approximately EUR 400 million in revenue headwinds and significant segment margin pressure. This, combined with ongoing pricing challenges—especially in areas like silicon carbide—could negatively impact profitability.
- Operational Risks with Fab Utilization: There are concerns around slowing fab utilization and increasing idle charges, with management highlighting the need to potentially further reduce loading. If production adjustments lag or underutilization worsens, additional margin headwinds may materialize in the second half of the fiscal year.
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Full-Year Margins
Q: How are margins trending for FY25?
A: Management expects adjusted gross margins around 40%, balancing volume and currency challenges while noting potential underutilization in H2. -
Tariff Impact
Q: What is the Q4 tariff haircut estimate?
A: They project a 10% revenue haircut in Q4—about EUR 400 million—as a cautious measure given tariff uncertainties. -
AI Revenue Outlook
Q: Is the AI revenue guidance confirmed?
A: Management confirmed EUR 600 million for this year and targets EUR 1 billion next year, reflecting robust growth in AI markets. -
Automotive & China Growth
Q: How did automotive, especially China, perform?
A: Automotive inventories sit near 12 weeks, with China showing double-digit growth that reinforces a healthy market position. -
CapEx Adjustments
Q: Why reduce CapEx by EUR 200M?
A: The reduction is due to timing delays on front-end investments and some currency effects, aligning maintenance needs with future growth. -
Fab Loading Management
Q: How is fab loading managed amid uncertainties?
A: With current fab loading in the 70s/high 60s, management is prepared to adjust production if tariff impacts intensify. -
Silicon Carbide Developments
Q: Any progress on SiC product upgrades?
A: New superjunction trench SiC and enhanced PSOC designs are underway, promising improved fast-charging solutions and a competitive edge.
Research analysts covering INFINEON TECHNOLOGIES.