1. Dominating the Automotive MCU Market

Infineon has successfully emerged as the global leader in the MCU market, thanks to its impressive growth in the automotive sector. 

In 2023, its automotive MCU revenue surged by 44% year-over-year, securing a 29% market share and surpassing Renesas to become the number one automotive MCU supplier worldwide.

Despite the overall MCU market experiencing a decline, Infineon maintained growth through differentiation. The global MCU market reached $28 billion in 2023 but is expected to drop to $22.4 billion in 2024. 

However, Infineon’s consistent expansion, with an annual growth rate of 13% since 2015—far above the industry average of 4%—demonstrates its resilience and strategic strength.

2. Leadership in Power Semiconductors and Automotive Chips

Infineon continues to hold leading positions in key semiconductor sectors:

• Global No.1 in Power Semiconductors

• Global No.1 in Automotive Chips

• Diversified MCU Portfolio, including AURIX™, TRAVEO™, PSOC™, XMC™, and secure MCUs, covering applications such as automotive, IoT, industrial automation, and edge AI.

3. Financial Performance in FY2024: Revenue Decline Amid Market Weakness

Infineon has faced revenue pressure in FY2024 due to market slowdowns:

• Revenue Growth Over Recent Years:

• FY2021: €11 billion (+29%)

• FY2022: €14.22 billion (+29%)

• FY2023: €16.3 billion (+15%)

• FY2024: €14.95 billion (-8%)

• Business Segment Performance:

• Automotive (ATV): 56% of total revenue, up 2% (the only segment with growth).

• Green Industrial Power (GIP): 21% of revenue, down 12%.

• Power & Sensor Systems (PSS): 13% of revenue, down 19%, with AI server-related business as a bright spot.

• Connected Secure Systems (CSS): 10% of revenue, down 26%.

• Quarterly Trends:

• FY24 Q1-Q3 saw declining revenue and profitability, with Q3 net profit dropping 52% YoY.

• Q4 revenue increased 5.9% QoQ but declined 5.5% YoY.

• FY25 Q1 revenue fell 7.5% YoY to €3.424 billion, down 12.6% QoQ.

• Market Challenges:

• Automotive market slowdown, with customers actively reducing inventories.

• Weak demand in industrial sectors, slow inventory digestion.

• Consumer electronics demand recovering at a sluggish pace.

4. “Step Up” Plan to Counter Market Challenges

To address market headwinds, Infineon launched the “Step Up” cost-saving program in May 2024, aiming to save €1 billion annually by 2027. Key measures include:

• Cost reduction & manufacturing optimization

• Restructuring & workforce adjustments

• August 2024: 1,400 job cuts, with an additional 1,400 positions relocated to lower-cost regions.

• October 2024: 105 layoffs in Silicon Valley.

Other semiconductor giants, including STMicroelectronics, NXP, and ON Semiconductor, have also implemented cost-cutting initiatives to improve efficiency amid market downturns.

5. Chip Spot Market Recovery: Uncertain Industry Outlook

• Since H2 2023, the spot market has weakened due to lower demand.

• As of March 2025, MCU lead times range from 10-26 weeks, MOSFETs 8-22 weeks, and IGBTs 12-42 weeks.

• AI-driven demand has shown early signs of revival, with specific components like PXE1410CDM-G003 gaining traction.

However, inventory challenges remain:

• FY25 Q1 inventory turnover days increased to 190 days, with a target of 153 days by FY25 Q4.

• 2025 is expected to see a moderate recovery, but cyclical market adjustments continue.

6. China Market and AI Business: Key Growth Drivers for 2025

Infineon is increasingly focusing on China and AI data center business to fuel future growth:

• China’s market potential:

• Revenue share in China has grown from 25% to 27%.

• Infineon remains the top MCU supplier in China.

• Strong demand from new energy vehicles (NEVs) is expected to drive sustained growth.

• AI data center expansion:

• The AI infrastructure boom is propelling demand for advanced semiconductor solutions.

• Infineon’s AI power solutions business is projected to exceed €1 billion in revenue within two years.

7. Conclusion & Future Outlook

• Challenges Ahead:

• Weak market demand and high inventory levels continue to pressure performance.

• The “Step Up” cost reduction initiative will enhance competitiveness.

• Growth Opportunities:

• China’s semiconductor market remains a key driver.

• AI-related business is expected to be a strong revenue stream.

• Infineon’s technological leadership positions it well for a gradual yet stable recovery.