German chipmaker Infineon forecast double-digit revenue growth for the year ahead and more than half of top-line growth would come from the automotive sector.
The Munich-based power chip specialist ditched its financial guidance in March as the coronavirus hit – just before its $10 billion acquisition of U.S. Cypress Technologies closed – but has since been lifted by an auto industry recovery.
“The sequential increase in revenue is very significant and confirms that the June quarter had marked the low point,” CEO Reinhard Ploss said of the automotive segment that accounts for two-fifths of Infineon’s revenue.
Infineon forecast flat sales in the first quarter of its new financial year – instead of showing the usual seasonal drop – setting up the company for projected growth of 22.6 percent in sales to 10.5 billion euros ($12.5 billion) in fiscal 2021.
Citi analyst Amit Harchandani estimated that implied underlying top-line growth of 10-11 percent, after accounting for the impact of consolidating Cypress.
Even though global light vehicle sales are forecast by IHS Markit to fall by 6 million to 83 million units next year, growth in electric and hybrid vehicles will play to Infineon’s strengths, said Ploss.
More than half of Infineon’s top-line growth would come from the automotive sector next year, he added, while consolidating Cypress would help expand segment margin – management’s preferred measure of the operating profitability of its business units – to a forecast 16.5 percent from 13.7 percent.