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Infineon Spends €5bn On Malaysia Plant In Bet On Electric Vehicles

German chipmaker Infineon is massively increasing its investment in its Malaysia plant while reporting slightly better-than-expected quarterly revenue in a semiconductor market where trends remain a mixed picture.

The Munich-based company said that its previous announcement of a €2bn investment into its silicon carbon chip fabrication plant in Kulim, Malaysia would rise to €7bn. This is largely thanks to purchase commitments and prepayments from clients in the region, including Chinese carmakers SAIC and Chery.

Infineon makes roughly half its revenues from serving automotive companies and is seeking to gain from the transition to EVs, which require more chips than those run by combustion engines. However, pressure on its existing automotive business led margins in the division to contract to 27 per cent in the three months to June 30 compared with 31 per cent in the previous quarter.

Infineon warned that margins across all of its four segments — including connected systems, green technology and sensor systems — next quarter would land at 25 per cent, slightly below analyst expectations. The company’s share price, which is up 28 per cent in the past year, tumbled more than 10 per cent on Thursday morning before recovering slightly.

“Semiconductor market trends continue to present a mixed picture with both light and shade,” said Infineon’s chief executive Jochen Hanebeck. Demand remained high in the automotive and renewable energy industries, he said, while pointing to a continued slowdown in home electronics such as smartphones and laptops.


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