With over 40% of its revenue coming from the auto sector, Infineon (OTCQX:IFNNY) is heavily dependent not just on the nascent recovery in auto builds around the world, but on the future trajectory of hybrid/EV car development, as well as the inclusion of increasingly sophisticated driver safety systems. Considering Infineon’s strong existing position in a range of existing markets - #1 in auto power, #2 in auto sensors, #3 in auto microcontrollers (or MCUs), and #1 in IGBTs (auto and non-auto) – there’s every reason to expect Infineon to leverage meaningful auto content growth over the next decade from both electrification and automation.
Infineon’s recent presentation on its auto business was more evolutionary than revolutionary, but there were some interesting takeaways, including the expectation for meaningful upcoming SiC award announcements. While Infineon management didn’t upgrade its quarterly guidance during the October 5 call, recent announcements from Sensata (ST) and STMicro (STM) should increase investor confidence in the possibility/likelihood of a beat-and-raise quarter. Given relative valuation, I still prefer STMicro to Infineon, but improving end-market demand in autos and factory automation/industrial should increase the odds of upward revisions over the next 12-18 months.
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Infineon Highlights The Meaningful Opportunities Ahead In The Auto Business
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