Infineon Grinding Through Its Downturn

Between elevated exposure to the weak auto market, the overall correction cycle in semiconductors, and concerns that it is overpaying for Cypress (CY), Infineon (OTCQX:IFNNY) has had a rough year. Down about 20% over the past year, Infineon has noticeably lagged the broader semiconductor sector despite a pretty solid record of financially underperforming its peers through cyclical downturns.

I’ve been more bearish on semiconductors than most sell-siders, and so far that position has been the right one. Infineon management has also been more conservative than many chip company management teams with respect to this corrective cycle, and I think that’s the smart way to play it. I think it’ll take a couple more quarters before Infineon sees real, meaningful improvement in orders and inventories, but I find the valuation to be fairly interesting here, and while Infineon may not be my favorite chip company, I like the long-term leverage to auto and industrial electrification and automation.

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Infineon Grinding Through Its Downturn