Profits decline despite hopes of an AI boom

Sales decreased by one billion euros

Slumping profits at German chipmakers

Infineon is struggling with falling profits, but is now banking on the AI ​​boom. A weak industry will have a very bad impact on the company.

Infineon ended a tough financial year with a drop in profit and hopes for an AI boom. The bottom line is that the semiconductor maker earned 1 billion euros in revenue from October 2024 to September 2025, about 22 percent less than the previous year. Sales also fell slightly, as the company announced Wednesday. “This year has been characterized by persistent weakness in most of our target markets,” said CEO Jochen Hanebeck. Considering the challenges, the results were “quite good”.

Things are bad for the semiconductor business for renewable energy, but the largest and most powerful long-established automotive sector is also weakening – this is where Infineon is feeling the impact of the crisis in the automotive industry. In addition, the weak dollar puts pressure on the business world.

However, CEO Jochen Hanebeck emphasized that Infineon had met expectations despite challenging conditions and was more optimistic about the future. “We expect moderate growth in financial year 2026,” he said. However, market conditions are still inconsistent.

Things are looking very positive on power supply solutions for AI data centers. In this fast-growing business, Infineon also raised its estimates. By 2025 it will account for sales of more than 700 million. By 2026, the figure was initially estimated to be around 1 billion, but Hanebeck has now increased this figure to 1.5 billion and sees the potential for even stronger growth.

The market will grow to 8 to 12 billion euros by the end of the decade. According to Infineon’s own statement, it currently has a share of 30 to 40 percent here. The company wants to maintain this value – roughly speaking, the result ranges from 2.4 to 4.8 billion euros.

Hanebeck, on the other hand, sees less upside for the auto industry. The growth impulse here remains subdued. “Many customers drive by and order within a short period of time,” he said. He also worries that many customers here will reduce their inventories again by the end of the year – to levels that are no longer sustainable.

He views this critically, especially considering the recent turmoil surrounding chip manufacturer Nexperia. It has been shown once again that semiconductors are not a timely product, he said. Instead, it would make sense for everyone involved to have a buffer in terms of shares. Infineon, for example, has inventory lasting about 30 days longer than its inventory target, even though this requires capital of around one billion euros.