Infineon Shares Already Pricing In Some Correction To Order And Margin Trends

No matter how many times the semiconductor sector proves its cyclicality, there are always analysts and investors ready to declare that “it’s different this time” during the next up-cycle. You can imagine what follows, and this cycle has been no different, with some analysts and investors attempting to claim that capacity constraints and new end-market demand will mean an end to the sector’s cyclicality, never mind the fact that past cycles had those same basic drivers (tight capacity and new growing end-markets).

Despite a strong long-term outlook, I didn’t like the shorter-term outlook for Infineon (OTCQX:IFNNY) back in August of 2021, and the shares are down more than 20% since then, underperforming the SOX index by close to 15%. At this point I’m still worried about the risk that estimates for 2023 (and possibly 2024) are just too high and that there’s further downside risk as orderbooks and margins shrink. I also note, though, that Infineon shares have already fallen close to 40% from their high and the valuation for longer-term investors is looking a lot more interesting.

 

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Infineon Shares Already Pricing In Some Correction To Order And Margin Trends