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Infineon Technologies AG IFX

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Infineon Reports Solid Results Amid a Supply Constrained Automotive Chip Market; EUR 30 FVE

Brian Colello, CPA Sector Director

Analyst Note

| Brian Colello, CPA |

Infineon reported solid fiscal first-quarter results with particularly impressive gross margin expansion, while also providing investors with a decent outlook for the March quarter. Similar to many of its peers, Infineon is seeing chip demand outstripping supply, especially in automotive where many OEMs can no longer build cars due to a lack of certain chips. This under-supply situation enabled Infineon to fully utilize its factories this quarter and we expect this to persist for the rest of fiscal 2021 (ending in September). We anticipate a strong year for Infineon in fiscal 2021, but it might take until fiscal 2022 for the supply constraints to alleviate. We will maintain our EUR 30 fair value estimate for narrow-moat Infineon and shares appear slightly overvalued to us today.

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Company Profile

Business Description

Infineon was spun off from German industrial conglomerate Siemens in 2000 and today is one of Europe's largest chipmakers. The company is a leader in the automotive and industrial chip markets and has also focused on ID cards and security solutions that include semiconductor content. Infineon has divested itself of some less profitable businesses in recent years, most notably the sale of its wireless chip division to Intel in 2010.

Am Campeon 1-15, Neubiberg
Munich, 85579, Germany
T +49 892340
Sector Technology
Industry Semiconductors
Most Recent Earnings Dec 31, 2020
Fiscal Year End Sep 30, 2019
Stock Type
Employees 47,058