Infineon Technologies is reporting results for the first quarter of the 2025 fiscal year (period ended 31 December 2024).
“Infineon has held up well in a weak market environment, closing its first quarter slightly ahead of expectations,” says Jochen Hanebeck, CEO of Infineon. “Against a continued uncertain economic backdrop, our business trajectory in this fiscal year is following the pattern we expected: following the expected inventory reduction, we continue to anticipate that the recovery in demand will be gradual for the current fiscal year. The positive stand-out is the move towards increased use of artificial intelligence, which is driving demand for our leading power supply solutions for AI data centres. This is a prime example of our long-term growth drivers, digitalisation and decarbonisation.”
Revenue and profitability decline
Infineon’s revenue fell to €3,424 million in the first quarter of the 2025 fiscal year, a 13% decline from the previous quarter’s €3,919 million. This was attributed to weaker demand across all four business segments: Automotive (ATV), Green Industrial Power (GIP), Power & Sensor Systems (PSS), and Connected Secure Systems (CSS). The gross margin also declined to 39.2% from 41.4% in the prior quarter, with an adjusted gross margin of 41.1%.
The Segment Result dropped from €832 million in the previous quarter to €573 million, with a Segment Result Margin of 16.7%, down from 21.2%. A compensation payment from a customer, amounting to a mid-double-digit million figure, was included in this result.
Non-Segment Result and restructuring costs
The Non-Segment Result saw a net loss of €255 million, improving from the previous quarter’s €359 million loss. It included costs related to goods sold (€64 million), R&D expenses (€18 million), selling and administrative expenses (€56 million), and other operating expenses (€117 million).
As part of its Step Up programme, Infineon recognised €101 million in impairment losses and set aside €12 million for anticipated losses. Operating profit stood at €318 million, down from €473 million in the prior quarter.
Financial position and debt
Infineon reported a net financial loss of €17 million in Q1, compared with a €26 million loss in the prior quarter. Tax expenses totalled €60 million, slightly lower than the €64 million in Q4 2024.
Profit from continuing operations stood at €243 million, down from €384 million in the previous quarter. However, overall profit for the period reached €246 million, reversing a prior quarter loss of €84 million.
Investments in property, plant, equipment, and other assets reached €731 million, a slight increase from the previous quarter’s €722 million. Free Cash Flow dropped significantly to -€237 million, compared with a positive €1,145 million in the prior quarter.
The company’s gross cash position declined to €1,957 million from €2,201 million, while net debt increased to €2,986 million from €2,610 million. Financial debt rose slightly due to a stronger US dollar.
Segment performance
- Automotive (ATV): revenue fell 11% to €1,919 million due to customer inventory adjustments. The Segment Result dropped to €363 million from €551 million, with a lower margin of 18.9%
- Green Industrial Power (GIP): revenue declined 32% to €340 million due to weak market conditions and inventory adjustments in industrial drives and renewable energy. The Segment Result fell sharply to €34 million from €111 million, with a reduced margin of 10%
- Power & Sensor Systems (PSS): revenue dipped 5% to €820 million. While data centre and AI-related product demand grew, other areas remained flat or declined. The Segment Result improved to €149 million from €105 million, helped by a compensation payment. The margin rose to 18.2% from 12.2%
- Connected Secure Systems (CSS): revenue fell 15% to €344 million due to weaker sales of payment cards and consumer applications. The Segment Result dropped to €30 million from €62 million, with a margin of 8.7%
Outlook for Q2 and 2025 fiscal year
For Q2 2025, Infineon expects revenue of around €3.6 billion. ATV revenue should rise in line with the company average, while GIP revenue is projected to grow at a higher rate. PSS and CSS revenues are expected to remain stable.
For the full 2025 fiscal year, revenue is now expected to be flat or slightly higher than 2024, revised up from an earlier forecast of a slight decline. The stronger US dollar is a key factor behind this adjustment. The adjusted gross margin is expected to be around 40%, with a Segment Result Margin in the mid-to-high-teens range.
Investments are planned at around €2.5 billion for the year, with depreciation and amortisation expected to total €2 billion. Adjusted Free Cash Flow is projected at €1.7 billion, while reported Free Cash Flow is estimated at €900 million.
Hybrid Bond Redemption
Infineon has announced the early redemption of its €600 million hybrid bond on 28 March 2025. A separate €600 million hybrid bond with a first call date in 2028 will continue to be classified as equity.