Infineon Technologies Ag · XETR:IFX
Infineon Technologies — Q2 FY2018 Earnings Presentation
59 slides from Infineon Technologies's earnings presentation, May 3, 2018
Slide 1: Second Quarter FY 2018 Quarterly Update
Second Quarter FY 2018 Quarterly Update Infineon Technologies AG Investor Relations
Slide 2: Agenda
Agenda 1 Infineon at a glance 2 Current highlights 3 Growth drivers Automotive Power Management Security 4 Selected financial figures Please regard the “Notes” and “Glossary” at the end of the presentation. 2018-05-03 Copyright © Infineon Technologies AG 2018. All rights reserved. 2
Slide 3: Infineon at a glance; Q2 FY18 figures
Infineon at a glance; Q2 FY18 figures Business Segments Power represents ~65% of revenue Industrial Power [EUR m] 811 Automotive Control (IPC) 17% 543 (ATV) Power Manage- 317 30% 164 44% ment & Multi- market (PMM) ATV IPC PMM CCS 9% Chip Card & Power Non-Power* revenue in Q2 FY18: €1,836 incl. OOS a
Slide 4: Our strategy is targeted at value creation through sustainable organic growth
Our strategy is targeted at value creation through sustainable organic growth Focus Technology leadership System understanding › Focus on fastest growing › Leverage core competencies › Create value for customers segments of semi market in different end markets to through system under- › Tackle globa
Slide 5: Infineon holds a leading position in its target markets
Infineon holds a leading position in its target markets Automotive Power discretes microcontroller-based semiconductors and modules Smart Card ICs total market in 2017: $34.5bn total market in 2016: $15.9bn total market in 2016: $2.79bn NXP 12.5% Infineon 18.5% Infineon 24.8% Infineon 10.8% ON Semi
Slide 6: Tight customer relationships, based on system know-how and application understanding
Tight customer relationships, based on system know-how and application understanding ATV IPC PMM CCS EMS partners Distribution partners 2018-05-03 Copyright © Infineon Technologies AG 2018. All rights reserved. 6
Slide 7: Infineon's organic revenue development clearly outperformed the total semi market
Infineon‘s organic revenue development clearly outperformed the total semi market [EUR m] organic CAGR(99-17): ~+9% 7500 CAGR(99-17): +5.9% 6000 4500 300,000 5,100 (excl. IRF) 6,059 (incl. IRF) 3000 126,895 1,200 200,000 296,383 295,996 353,884 1500 1,681 2,045 1,821 1,995 2,289 2,366 2,701 2,906 2,
Slide 8: Organic RoCE as the key value metric typically amounts to ~2x WACC
Organic RoCE as the key value metric typically amounts to ~2x WACC 30% 20% 10% 0% FY15 FY16 FY17 Q1 FY18 Q2 Q3 Q4 RoCE (excluding PPA, Deferred Tax Effects and RF power sale) RoCE (reported) 2018-05-03 Copyright © Infineon Technologies AG 2018. All rights reserved. 8
Slide 9: Our commitment to investors: Continued value creation through growth
Our commitment to investors: Continued value creation through growth Earnings-per-share (EPS) development [EUR cent] +24% +122% 40 40 30 EPS basic 20 24 26 21 22 22 20 EPS adjusted 18 16 18 10 0 Q2 FY17 Q3 Q4 Q1 FY18 Q2 Total cash return to shareholders [EUR m] 308 1,809 › Policy of sustainable 283
Slide 10: Outlook for Q3 FY18 and FY18
Outlook for Q3 FY18 and FY18 Outlook FY18* Outlook Q3 FY18* (compared to FY17) Increase of 3% Increase between Revenue 4% and 7% +/- 2%-points (prev.: “Increase of 5% +/- 2%-points“) Segment At the mid-point of the At the mid-point of the revenue guidance: revenue guidance: Result ~17% Margin ~17% (
Slide 11: Agenda
Agenda 1 Infineon at a glance 2 Current highlights 3 Growth drivers Automotive Power Management Security 4 Selected financial figures 2018-05-03 Copyright © Infineon Technologies AG 2018. All rights reserved. 11
Slide 12: Q2 FY18 Group and Division Performance
Q2 FY18 Group and Division Performance Revenue: Segment Result: Segment Result Margin: IFX €1,836m (+4% y-y) €314m (+6% y-y) 17.1% ATV IPC PMM CCS [EUR m] [EUR m] [EUR m] [EUR m] 783 766 811 +4% 736 770 +8% 520 557 573 545 543 -3% +4% 293 321 328 296 317 17.5 23.2 22.0 19.6 19.9 16.7 15.7 14.8 13.4
Slide 13: Strategic steps help us build system capability for seamless human-machine-interaction
Strategic steps help us build system capability for seamless human-machine-interaction R&D cooperation and strategic investment in XMOS Acquisition of Merus Audio › Currently, two Amazon-qualified development kits for voice › Broadening product portfolio recognition - both featuring XENSIV™ sensors.
Slide 14: Backend manufacturing JV: strengthening relationship to leading Chinese OEM SAIC
Backend manufacturing JV: strengthening relationship to leading Chinese OEM SAIC Deal rationale › ensure stronger local recognition: partner with the largest Chinese OEM 49% 51% › ensure additional volume: bring Infineon closer to the world‘s most important xEV market SIAPM SAIC Infineon Automotive
Slide 15: Infineon and Cree agree on strategic long-term supply agreement of SiC wafers
Infineon and Cree agree on strategic long- term supply agreement of SiC wafers › 400 amps › 800 volt › Infineon has already converted all its SiC manufacturing lines to 150 mm SiC wafers; the agreement covers only this wafer diameter › SiC target markets: › today: photovoltaic, charging infrastuctur
Slide 16: Automatic emergency call (eCall) saves lives: Daimler builds on eSIMs from Infineon
Automatic emergency call (eCall) saves lives: Daimler builds on eSIMs from Infineon* Infineon is currently the world’s leading supplier of eSIMs for OEMs › The automatic emergency call is generated either automatically via activation of in- vehicle sensors or manually by the vehicle occupants › In t
Slide 17: Infineon fosters its leading position in transmission with a design-win in China
Infineon fosters its leading position in transmission with a design-win in China Transmission system Transmission control unit (TCU) battery Transmission System power Basic IC MOSFET (power supply, sensor interface) solenoid valve Control IC speed sensor (6-channel position sensor AURIX™
Slide 18: Agenda
Agenda 1 Infineon at a glance 2 Current highlights 3 Growth drivers Automotive Power Management Security 4 Selected financial figures 2018-05-03 Copyright © Infineon Technologies AG 2018. All rights reserved. 18
Slide 19: Infineon benefits from industrial and auto, the by far fastest growing segments
Infineon benefits from industrial and auto, the by far fastest growing segments CAGR 2017 – 2022** by Semiconductor Industry Segment Automotive 7.7% $38bn* Industrial 7.1% $49bn* Consumer 4.2% $40bn* Total Semi Market 3.2% $429bn* Data Processing 2.7% $148bn* Chip Card ICs*** 2.5% $3.3bn* Communicat
Slide 20: Infineon's long-term growth is based on sustainable growth drivers
Infineon‘s long-term growth is based on sustainable growth drivers ATV IPC PMM CCS Courtesy: Hyundai › CO2 reduction › Energy efficiency › Energy efficiency › Security as a function › Advanced Driver › Automation › Power density Assistance › Mobile payments › Productivity › BLDC motors Systems incre
Slide 21: Agenda
Agenda 1 Infineon at a glance 2 Current highlights 3 Growth drivers Automotive Power Management Security 4 Selected financial figures 2018-05-03 Copyright © Infineon Technologies AG 2018. All rights reserved. 21
Slide 22: Infineon is system leader in automotive; making cars clean, safe and smart
Infineon is system leader in automotive; making cars clean, safe and smart #2 with market share gains in power and sensors: › #1 in power semiconductors* › #2 in sensors* › #4 in microcontrollers* (#1 in powertrain**) Infineon is well Most balanced portfolio with sensors, micro- positioned to contro
Slide 23: Infineon's position in the automotive semiconductor universe
Infineon's position in the automotive semiconductor universe Automotive semiconductors 2017 total market size: $34.5bn NXP 12.5% Market share trend Infineon 10.8% +0.1%-pt – Infineon benefits disproportionately Renesas 10.0% from the two mega trends TI 8.0% – ADAS/AD STM 7.1% – clean cars Sensors Mi
Slide 24: Megatrends shaping the automotive market; significantly increasing semi content per car
Megatrends shaping the automotive market; significantly increasing semi content per car Connectivity Automated Driving eMobility Enabling the communication of cars Advanced Security ADAS/AD and clean cars will generate half of the ~8% trendline growth of ATV Enabling safety Enabling CO2 Enabling sec
Slide 25: ADAS/AD semi growth driven by radar and camera sensor modules over the next 5 years
ADAS/AD semi growth driven by radar and camera sensor modules over the next 5 years Average semiconductor content per car by level of automation Level 2 (~2020) Level 3 (~2025) Level 4/5 (~2030) Sense Compute Actuate $55 $860 $190 $30 $580 $110 $190 $70 $190 $230 $180 $195 $90 $0 $20 $150 $40 radar
Slide 26: More sensors required for any next level of automation will lead to sensor cocoon in L4/5
More sensors required for any next level of automation will lead to sensor cocoon in L4/5 Level of automation Level 2 Level 3 Level 4/5 Automatic emergency brake/ forward collision warning Application* Parking assist Valet parking Lane keep assist Highway assist Highway and urban chauffeur Radar # o
Slide 27: CO2 emission targets are the key triggering points for increase in semiconductors
CO2 emission targets are the key triggering points for increase in semiconductors National fleet emissions CO2 drives three major trends 200 historical performance (1) Higher efficiency of the ‘classic’ ICE: enacted targets 180 › EPS (electric power steering) proposed targets China start-stop Grams
Slide 28: The incremental demand of power semiconductors is a significant opportunity
The incremental demand of power semi- conductors is a significant opportunity 2017 average xEV semiconductor content by degree of electrification 48 V / MHEV HEV / PHEV BEV Sense Compute Actuate $55 $695 $190 $695 $250 $380 $75 $455 $20 $355 $5 $20 $355 $15 $50 $75 ICE sensors semi BoM sensors semi
Slide 29: With the transition from ICE to xEV the power semi content in powertrain increases by ~15x
With the transition from ICE to xEV the power semi content in powertrain increases by ~15x Average semiconductor content by type of car [USD] 695 265 355 17 130 Courtesy: Hyundai 38 300 300 Courtesy: Volkswagen ICE HEV, PHEV, BEV other features (power and non-power semi) drivetrain non-power semi dr
Slide 30: Power semiconductor demand for all different levels of electrification
Power semiconductor demand for all different levels of electrification incremental power semi 400 V .. 800 V content for drive train BEV, Fuel Cell EV ~$300 - energy recovery - onboard charger start-stop only Plug-in HEV Full HEV Hybrid - start-stop - start-stop ~$200 - energy recovery - energy reco
Slide 31: Infineon has unparalleled package expertise for high-power main inverter applications
Infineon has unparalleled package expertise for high-power main inverter applications Bare die Discretes Scalable products Plug-n-Play HybridPACK™ solutions Si IGBT Si bare dies HybridPACK™ Double- Easy modules Sided Cooling SiC bare dies SiC MOSFET SiC optimized package solution 2018-05-03 Copyrigh
Slide 32: ADAS/AD, clean cars, and adoption of premium features drive growth
ADAS/AD, clean cars, and adoption of premium features drive growth Drivers for semiconductor content per car Vehicle production Clean cars ADAS/AD Comfort, premium › Legislation › Today: › Premium cars are › crash avoidance early adopters of › Improvements of ICE › ADAS high-end comfort and › 2% gro
Slide 33: Agenda
Agenda 1 Infineon at a glance 2 Current highlights 3 Growth drivers Automotive Power Management Security 4 Selected financial figures 2018-05-03 Copyright © Infineon Technologies AG 2018. All rights reserved. 33
Slide 34: Infineon is #1 and technology leader in power semiconductors
Infineon is #1 and technology leader in power semiconductors #1 in the market* for MOSFETs, discrete IGBTs, IGBT-based modules and total market Broad product and technology portfolio Infineon is well positioned to gain further market Addressing broadest range of applications share and earn 300 mm th
Slide 35: Efficiency, productivity and legislation are main market drivers for power applications
Efficiency, productivity and legislation are main market drivers for power applications IPC Drives Renewables MHA Traction › Energy efficiency › Legislation › Energy efficiency › Growing population › Automation › Growing share of › Growing VSD in mega cities › Productivity increase renewables as par
Slide 36: IPC is perfectly positioned to outperform traditional markets and leverage emerging ones
IPC is perfectly positioned to outperform tradi- tional markets and leverage emerging ones Traditional markets with <5% p.a. Emerging markets with >5% p.a. › Portfolio for automation application to › Comprehensive offering and expertise compensate low demand in drives in innovative material SiC › St
Slide 37: PMM's growth is built on many applications from different sectors
PMM‘s growth is built on many applications from different sectors PMM Computing Industrial Consumer / Misc Communications › Server › Industrial power › Pedelecs / eBikes › Handsets › PC supplies › Multicopter › Wearables › Notebook › xEV charger › Aviation › Cellular › Peripherals › PV roof-top inve
Slide 38: Product-to-System approach opens growth opportunities beyond MOSFETs
Product-to-System approach opens growth opportunities beyond MOSFETs Essential parts of any electronic system (e.g. in an SMPS); can be realized with separate components or as an integrated power stage as system-on-chip Controller Driver MOSFET releases low-power translates it into high- signal to s
Slide 39: Strengthening IC business allows for faster growth in power than market average
Strengthening IC business allows for faster growth in power than market average Average through-cycle growth of power business: 8% p.a. 2-3%-pt p.a. from power ICs + 5-6%-pt p.a. from MOSFETs Expand product portfolio Maintain technology leadership Bundle with MOSFETs Capitalize on scale advantage Ta
Slide 40: PMM is unlocking further growth potential by extending its power IC portfolio
PMM is unlocking further growth potential by extending its power IC portfolio Example: XDP™ – solution for digital power control Adapters and chargers Commercial lighting More than 60m pieces shipped since market launch in 2015; shipment of another 60m pieces expected in FY18 › XDP™ is addressing ke
Slide 41: PMM is a leader in core technologies for ambient sensing, thus driving innovation
PMM is a leader in core technologies for ambient sensing, thus driving innovation MEMS Radar Time of Flight › #2 in the market (33.5%) › 60 GHz radar sensors e.g. › XENSIV™ REAL3™ image for silicon microphones* for gesture sensing sensor for AR/VR › World’s best signal-to- (example: Google Soli) app
Slide 42: Tailored growth strategies help maintain leadership position in both major segments
Tailored growth strategies help maintain leadership position in both major segments Power RF & Sensing Current position Growth based on 3-layer-model › Scale and technology leader in MEMS Compound semis power MOSFETs › Broadest portfolio: 25 V – 900 V › Addressing all applications › #1 holding ~1/3
Slide 43: Agenda
Agenda 1 Infineon at a glance 2 Current highlights 3 Growth drivers Automotive Power Management Security 4 Selected financial figures 2018-05-03 Copyright © Infineon Technologies AG 2018. All rights reserved. 43
Slide 44: Infineon is the leader in security solutions for the connected world
Infineon is the leader in security solutions for the connected world #1 in microcontroller-based smart card ICs* Infineon is well Complete portfolio of hardware, software, positioned to services and turnkey solutions benefit from the growth trends in the security Leading in growth segments payment,
Slide 45: Tailored embedded security µC portfolio for applications in the hyper-connected IoT world
Tailored embedded security µC portfolio for applications in the hyper-connected IoT world › Infineon AURIX™ microcontroller with HSM for onboard communication › Security microcontrollers (e.g. eSIMs, TPMs) enable various functions like eCall, software over-the-air, vehicle-to-infrastructure, and on-
Slide 46: Infineon equips Juniper Networks with hardware-based security solutions
Infineon equips Juniper Networks with hardware-based security solutions Trusted Platform Module (TPM) › Networking solutions provider Juniper Networks has decided to equip several of their product lines of routers, firewalls and other products with hardware-based security › For achieving a significa
Slide 47: Agenda
Agenda 1 Infineon at a glance 2 Current highlights 3 Growth drivers Automotive Power Management Security 4 Selected financial figures 2018-05-03 Copyright © Infineon Technologies AG 2018. All rights reserved. 47
Slide 48: Opex level right on target
Opex level right on target S and G&A* R&D** [EUR m] 208 209 206 205 209 192 195 200 200 189 195 15% 175 150 14% 125 13% 100 75 11.8% 12% 11.4% 11.3% 11.5% 11.4% 50 11.0% 10.9% 10.9% 10.6% 11% 25 10.4% 0 10% Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 FY17 FY18 FY17 FY18 General & Administration Selling R&D % of s
Slide 49: Increased trade receivables lead to higher working capital
Increased trade receivables lead to higher working capital Working capital* Inventories [EUR m] [EUR m] [days] 1,228 1,245 1,240 1,282 1,305 922 929 1200 120 1000 822 841 1000 100 800 621 800 99 99 98 102 102 80 600 600 60 400 400 40 200 20 200 0 0 0 Q2 FY17 Q3 Q4 Q1 FY18 Q2 Q2 FY17 Q3 Q4 Q1FY18 Q2
Slide 50: Investments of ~€1.2bn due to strong order intake
Investments of ~€1.2bn due to strong order intake Investments* D&A [EUR m] ~1,200 1200 30% 1,022 1000 ~850 826 833 812 785 760 800 ~100 20% 668 140 129 16.2% 114 600 514 466 8 378 14.5% 15.5% 13.5% 263 7 400 12.8% 13.1% 12.9% 12.1% 11.9% 11.5% 11.5% 10% 9.8% 200 293 459 506 646 693 683 ~750 0 0% FY1
Slide 51: Healthy gross cash and net cash position
Healthy gross cash and net cash position Liquidity development [EUR m] 1,789 1,834 1,809 1,859 358 2,017 2,049 2,217 2,452 2,312 2,438 649 618 503 32 Q2 Q3 Q4 Q1 Q2 FY17 FY18 Gross Cash Debt Net Cash › Operating cash flow from continuing operations was €310m › Free Cash Flow from continuing operatio
Slide 52: Infineon has a balanced maturity profile and a solid investment grade rating (BBB) from S&P
Infineon has a balanced maturity profile and a solid investment grade rating (BBB) from S&P Maturity profile [EUR m; US$ m; nominal values] €500 $350 $350 €300 $235 €171 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 Campeon 8-year 10-year 12-year Eurobond final re- Eurobond USPP USPP USPP S
Slide 53: Part of your life. Part of tomorrow.
Part of your life. Part of tomorrow. infineon
Slide 54: Disclaimer
Disclaimer Disclaimer: This presentation contains forward-looking statements about the business, financial condition and earnings performance of the Infineon Group. These statements are based on assumptions and projections resting upon currently available information and present estimates. They are
Slide 55: Infineon is a long-standing member of Europe's leading sustainability indices
Infineon is a long-standing member of Europe's leading sustainability indices Infineon’s most recent achievements › Sep 2017: Infineon is listed in the STOXX® Global ESG Leaders Indices, which serves as an indicator of the quality of Infineon’s performance in the governance, social and environmental
Slide 56: Financial calendar
Financial calendar Date Location Event 12 June 2018 London Capital Markets Day “IFX Day 2018” 13 – 14 Jun 2018 Paris Exane BNP Paribas European CEO Conference 22 Jun 2018 London Deutsche Bank AutoTech Conference 01 Aug 2018* Q3 FY18 Results 30 Aug 2018 Frankfurt Commerzbank Sector Conference Untersc
Slide 57: Notes
Notes Investments = 'Purchase of property, plant and equipment' + 'Purchase of intangible assets and other assets' incl. capitalization of R&D expenses Capital Employed = 'Total assets' – 'Cash and cash equivalents' Please note: All positions in ' ' refer to the – 'Financial investments' respective
Slide 58: Glossary
Glossary AD automated driving MHA major home appliances micro- vehicles using start-stop systems and limited ADAS advanced driver assistance system hybrid recuperation mild- vehicles using start-stop systems, recuperation, DC- AEB automatic emergency braking hybrid DC conversion, e-motor AR augmente
Slide 59: Institutional Investor Relations contacts
Institutional Investor Relations contacts Alexander Foltin Corporate Vice President +49 89 234-23766 Finance, Treasury & alexander.foltin@infineon.com Investor Relations Joachim Binder Senior Director +49 89 234-25649 Investor Relations joachim.binder@infineon.com Holger Schmidt Senior Manager +49 8
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