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Infineon Technologies shares jumped after the group raised its sales forecasts for the fiscal year as it expects to benefit from a stronger U.S. dollar, while sales in the December quarter fell less than feared amid solid demand for artificial-intelligence chips.
The German chip maker said revenue would be flat to slightly up in the year to the end of September from the 14.96 billion euros ($15.94 billion) it reported for fiscal 2024. Infineon had previously forecast a slight decline. Meanwhile, Infineon’s segment result margin–a key profitability measure–is still expected in the mid-to-high-teens percentage range.
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Infineon shares in Frankfurt opened 10% higher on Tuesday.
The upgrade to guidance, which mainly reflects Infineon’s expectations of a stronger U.S. dollar, comes after a slightly better-than-expected December quarter amid a boost in semiconductors sales for servers and data centers behind the AI boom. However, areas of the semiconductor industry outside of artificial intelligence continue to suffer from sluggish demand.
Orders for legacy chips found in cars and industrial equipment has been subdued in recent months as car makers and manufacturers of industrial machinery cut spending since they stockpiled the semiconductors they needed years ago.
The divergence in demand between AI chips and legacy semiconductors meant that chip makers with significant AI exposure like Nvidia have grown exponentially, while companies such as Infineon that mostly sell chips to the automotive sector and makers of industrial equipment have struggled.
Infineon slashed its sales guidance three times in the previous fiscal year. Last week, Tesla supplier STMicroelectronics said it was expecting lower sales this quarter, citing challenges in demand for legacy semiconductors.
“Following the expected inventory reduction, we continue to anticipate that the recovery in demand will be gradual for the current fiscal year,” Infineon Chief Executive Jochen Hanebeck said.
The company posted €3.42 billion in sales in the three months to the end of December, down 8% on year. Infineon’s automotive division—which accounts for the lion’s share of revenue—logged a 8% contraction in sales. Only the power and sensor systems business reported an increase in sales, lifted by chips for servers and data centers.