(Nov 12): Infineon Technologies AG forecast revenue will decline in the 2025 fiscal year, missing analyst estimates, in a sign that demand from automotive customers in Europe and the US will remain depressed.

The German chipmaker expects revenue will “slightly decline” from the year that ended in September, when the company made €14.96 billion (RM70.52 billion), it said in a statement on Tuesday. The forecast compares to an average estimate of €15.75 billion among analysts surveyed by Bloomberg.

Infineon is the first major European chipmaker to give guidance for 2025, and sales to the car industry account for over half of the Munich-based company’s revenue. While demand for chips that power artificial intelligence is booming, other sectors of the semiconductor industry have stumbled, including chipmakers that depend on car manufacturers.

“Currently, there is hardly any growth momentum in our end markets except from AI; the cyclical recovery is being delayed,” CEO Jochen Hanebeck said in the statement. “We are therefore preparing for a muted business trajectory in 2025.”

Revenue in the current quarter will be around €3.2 billion, with a segment result margin in the mid-teens, according to the statement. The average analyst estimate for the period is €3.8 billion.

In the 2024 fiscal year, Infineon cut its revenue forecast three times as an expected recovery in the auto sector failed to materialise.

Revenue in the quarter ending in September fell 6% from a year earlier to €3.92 billion, according to the statement. That missed the average analyst estimate of €3.98 billion. Segment result margin, a profitability metric, was 21.2% compared to 25.2% a year ago.

The company plans investments at around €2.5 billion in 2025. The focus will be on its German Dresden site for smart power technologies for applications such as powering AI.

“We have cut our investments by 10% compared to last year,” Chief Financial Officer Sven Schneider said in an interview on Bloomberg TV. “We are focusing on the strategically relevant decisions, like our Dresden module four.”

Carmakers in Europe are struggling to compete with cheaper models from China, and the market for electric vehicles has also hurt peers STMicroelectronics NV and NXP Semiconductors NV. There is also an inventory glut of chips for the industry as demand remains weak.

At the same time, Beijing has ramped up its own semiconductor production, and the European Commission has warned that the continent’s chipmakers are at risk of losing market share for more mature types of semiconductors.

Last month, the European Union imposed higher tariffs on electric vehicles from China, escalating tensions that carmakers say could hurt their sales there.

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