Infineon Tech AG

Ladies and gentlemen, good morning everyone. Welcome to the conference call for analysts and investors for Infineon's 2025 fiscal third quarter results. Today's call will be hosted by Alexander Foltin, Executive Vice President Finance and Treasury and Investor Relations at Infineon Technologies. As a reminder, this call is being recorded. This conference call contains forward-looking statements and or assessments about the business financial conditions, performance and strategy of the Infineon Group. These statements and or assessments are based on assumptions and management expectations resting upon currently available information and present estimates. They are subject to a multitude of uncertainties and risks, many of which are partially or entirely beyond Infineon's control. Infineon's actual business development, financial conditions, performance and strategy may therefore differ materially from what is discussed in this conference call. Beyond disclosure requirements stipulated by law, Infineon does not undertake any obligations to update forward-looking statements. At this time, I would like to turn the call over to Infineon. Please go ahead.

Good morning, ladies and gentlemen. Thank you for joining our summerly earnings call covering the third quarter of our 2025 fiscal year. On this call, you have our CEO, Jochen Hanebeck, our CFO, Sven Schneider, and our CMO, Andreas Werschitz. Following our proven routine, Jochen and Sven will provide an overview on the market situation and divisional performance, key financials, and our outlook. After that, we will start our Q&A session. As usual, the illustrating slideshow, which is synchronized with a telephone audio signal, is available at infineon.com slash slides. We will again provide a PDF with Jochen's and Sven's introductory remarks in the course of the call on our website, namely infineon.com slash investor. There you will also find a recording of this conference call, including the aforementioned slides, a copy of our pre-earnings press release, as well as our investor presentation. At this time, Jochen, over to you.

Thank you, Alexander, and good morning, everyone. Let me start today's call with some broader perspectives. Semiconductor markets are slowly coming out of one of the most protracted downturns in history. After long rolling cyclical correction affecting different end markets at different points in time, we should expect a rolling recovery to set in. And we are indeed seeing more evidence of it. Our June quarter marked the second consecutive one with sequential growth, at constant currency even above 9%. In the September quarter, we expect revenues to grow again, and it will be the first quarter in two years with year-over-year growth, considering a material adverse currency development. That said, the usual dynamics of supply and demand remain influenced by geopolitical and macroeconomic turmoils. In the light of rising US tariff schemes, customers order on short notice and are refraining from any broader restocking. Hence, we continue to expect some near-term headwinds, which we will address with our proven cycle management. From a more structural point of view, I would like to offer a fresh look at Infineon, aligning the presentation of our product categories closer to industry standards, the success of our strategy to build an unmatched and system-relevant The portfolio of competences becomes even more apparent. Taking our revenue from the 2024 fiscal year as the basis, around 40% relates to power discrets and modules. Our historical stronghold, covering silicon, silicon carbide, and gallium nitride. Around 30% pertains to analog and sensors. This includes for example drivers, DC-DC converters and smart power switches and of course our broad array of sensors as well as our portfolio of specialty memories. The final 30% belong to the control and connectivity category encompassing our automotive security industrial microcontrollers as well as broad spectrum of wireless and wired product families. The latter will be strengthened further through the acquisition of the automotive Ethernet business from Mabel on which I will share good news with you in a moment. For Infineon's differentiation and value creation it is imperative to have this complementing portfolio and related deep set of competencies. Based on them we will be able to also address applications which are yet to emerge and following our P2S approach will then deliver long term value. Now let me continue with a look at our June quarter financials. In our third quarter, we recorded revenues of 3 billion 704 million euros. This represents a sequential increase of around 3%, despite a substantial negative currency effect with an average US dollar euro exchange rate of 1.14 for the quarter versus 1.05 for the quarter before. The strong underlying volume pickup, especially in GIP and PSS, is a reflection of customers having worked through their inventories in these areas. The segment result amounted to €668 million, with a segment result margin of 18%. The improvement in comparison to the previous quarter resulted mainly from volume growth and lower idle costs, overcompensating the adverse currency development. Our order backlog stood at around 18 billion euros at the end of June, influenced mostly by the significantly weaker US dollar compared to the end of Q2. Now to our divisional review beginning with automotive. In the third quarter of the 2025 fiscal year, ITV achieved revenues of 1 billion 870 million euros, a slight increase in comparison to the previous quarter. The segment result of ATV amounted to 371 million euros, corresponding to a segment result margin of 19.8%. The slide downtake is related to currency and mixed effects overcompensating lower idle cost. Global car sales have been fairly healthy in the June quarter, led by strength in U.S. and China. Going forward, however, there are concerns on potential tariff-led weakness in the former and negative news flow around inventory build, price wars, and removal of trade in subsidies in the later. So there's caution around the overall auto market for the rest of the year to be considered. Regarding semiconductor inventories, we see the risk that some customers lower their inventory targets yet again due to significant financial constraints, implying the possibility of further destocking to unsustainable levels. In this environment, we are building on the unique strength of having the broadest automotive semiconductor portfolio. And with the Ethernet business from Mavel, we will leverage a highly complementary technology by combining it with our existing broad MCU portfolio to provide our customers even more comprehensive leading solutions for software-defined vehicles. We have obtained all necessary regulatory approvals for the transaction in a very short period of time. We expect the closing to happen in the near future and are excited to welcome several hundred experts in the field of Ethernet, which will also help us to make even broader inroads into other areas of physical AI, such as humanoid robots. Now to some design wins. We are pleased to report that we are designed into the world's most advanced active suspension system by U.S.-based Clear Motion. This 48-volt high-end application is during our XMCU in combination with Optric. Power management IC, an analog mixed signal product and our Optimus switch featuring a world-class forward resistance of only 1.2 mΩ. The system is not only used by European premium sports car manufacturer but is also employed in further cutting-edge vehicles like the NIO ET9 in China. A further highlight for the quarter is a mid-triple-digit million lifetime design win for the power distribution in a new class of cars of a European premium OEM. This innovative vehicle lineup will feature a broad set of smart power components like our ProFed smart switches across a broad range of ADAS, chassis and E-architecture applications. Let's now move to green industrial power. Where revenues increased by 9% quarter over quarter to 431 million euros, a constant US dollar-euro exchange rate growth would have been double-digit. Key applications like power infrastructure, renewable energy, as well as automation and drives all contributed to the sequential improvement. As a consequence, GIP segment result has improved notably to €61 million in the third quarter of our 2025 fiscal year, equivalent to a segment result margin of 14.2%. Structural growth drivers continue to strengthen demand and expand business opportunities, particularly in power infrastructure. This end demand is now meeting more normalized customer inventories with a few pockets of additional destocking remaining, laying the path for the typical seasonal pattern. We are proud to announce that Infineon power modules are being deployed in the world's largest grid-forming project paired with a large-scale energy storage system in China. This plant combines a storage capacity of around 400 MWh with a photovoltaic system and is able to power roughly 270,000 households. It is capable of autonomously adjusting voltage and frequency during grid fluctuation or outages without relying on external voltage signals. A prime example of differentiation due to our unique expertise to build highly reliable modules required in such an application. Now to power and sensor systems. PSS recorded revenues of 1,053,000,000 euros in the June quarter, a growth of 8% quarter over quarter, which at constant currencies would have been above 10%. Continued significant growth momentum we see for our power solutions for AI servers was a key contributor. The segment result of PSS increased to 198 million euros, corresponding to a segment result margin of 18.8%. The increase was driven by higher volumes and lower idle costs, more than offsetting adverse exchange rate effects. AI remains a powerful engine of growth, with infrastructure expansion and data center build-outs accelerating dynamically, aligning with our projection to achieve related revenues of around 600 million euros this fiscal year, rising to around 1 billion euros next year. A cornerstone of our success in this market is the unmatched breadth of our product portfolio. We are not only offering individual power conversion stages, but are collaborating closely with leading customers to optimize the entire power flow from grid to core, now and in the future. As an example, in May we announced a significant collaboration with NVIDIA to develop the industry-first 800V high-voltage direct current power delivery architecture for AI data centers. This innovative system will considerably improve energy-efficient power distribution and allow for direct power conversion close to the core, supporting the increasing demands of data centers as they scale beyond 100,000 GPUs and require over 1 MW per rack. Another highlight from our sensor portfolio are the automotive radar MMIC serving the newly emerging central radar architecture in which the compute is done solely in the central high-performance compute box, leaving only the MMIC at the edge part, which is then connected via Ethernet to the central box. We see this architecture being adopted very quickly in China and are therefore perfectly positioned to benefit from the rollout of ADAS. To complete the divisional review, let's take a look at connected secure systems. CSS recorded quarterly revenues of €349 million, representing a 2% decrease compared to the March quarter, reflecting an unfavorable currency development. The segment result of CSS declined slightly to €39 million, corresponding to an unchanged segment result margin of 11.2%. IoT and security markets move sideways as macroeconomic uncertainties continue to weigh on consumer sentiment and corporate spending. Against this backdrop, innovation remains key. This covers both continuous improvements as well as lead-drop developments. An example for the former are our security solutions, where we have recently celebrated the cumulative delivery of 10 billion Integrity Guard-enabled devices. An example of a step change is the introduction of the first security chip that even quantum computers cannot hack at present, of which we reported two quarters ago. We now book the first large design win for Optiga TPM, a future-proof security solution with a post-quantum cryptography protected firmware to be integrated into the next version of a market-leading gaming console. Now over to Sven, who will comment on our financial figures.