Infineon Technologies Ag · XETR:IFX
Infineon Technologies — Q4 FY2017 Earnings Presentation
56 slides from Infineon Technologies's earnings presentation, Nov 14, 2017
Slide 1: Fourth Quarter FY 2017 Quarterly Update
Fourth Quarter FY 2017 Quarterly Update Infineon Technologies AG Investor Relations
Slide 2: Table of Contents
Table of Contents 1 Infineon at a Glance 2 Quarterly Highlights 3 Growth Drivers 4 Selected financial figures Please regard the slides “Disclaimer”, “Notes” and “Glossary” at the end of the presentation. 2017-11-14 Copyright © Infineon Technologies AG 2017. All rights reserved. 2
Slide 3: Infineon at a glance
Infineon at a glance Business Segments Power represents ~60% of revenue Industrial Power [EUR m] 736 Automotive Control (IPC) 18% 573 (ATV) 328 Power Manage- 32% 181 40% ment & Multi- market (PMM) ATV IPC PMM CCS 10% Chip Card & Power Non-Power* revenue in Q4 FY17: €1,820m incl. OOS and C&E of €2m S
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 Automotive Power mgmt RF and sensors Security System leader #1; system and Broad RF and sensor #1 in in automotive technology leader technology portfolio security solutions
Slide 5: Infineon increased relative market share in power and outperformed chip card market
Infineon increased relative market share in power and outperformed chip card market Automotive Power discretes microcontroller-based semiconductors and modules Smart Card ICs total market in 2016: $30.2bn total market in 2016: $15.9bn total market in 2016: $2.79bn NXP 14.0% Infineon 18.5% Infineon 2
Slide 6: Tight customer relationships are based on system know-how and app understanding
Tight customer relationships are based on system know-how and app understanding ATV IPC PMM CCS EMS partners Distribution partners 2017-11-14 Copyright © Infineon Technologies AG 2017. All rights reserved. 6
Slide 7: Infineon's organic revenue development clearly outperformed total semi market
Infineon‘s organic revenue development clearly outperformed 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 2,916 1,681 2,045 1,821 1,995 2,289 2,366 2,701 2,906
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% FY14 FY15 FY16 Q1 FY17 Q2 Q3 Q4 RoCE (excluding PPA and Deferred Tax Effects) RoCE (reported) 2017-11-14 Copyright © Infineon Technologies AG 2017. 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] +5% 30 - 20% 20 24 22 22 20 21 21 EPS basic 17 18 16 10 14 EPS adjusted 0 Q4 FY16 Q1 FY17 Q2 Q3 Q4 FY17 Total cash return to shareholders [EUR m] 308 1,809 › Policy of sustainable 283
Slide 10: Outlook for Q1 FY18 and FY18
Outlook for Q1 FY18 and FY18 Outlook FY18* Outlook Q1 FY18* (compared to FY17) Decrease of 2% Increase of 9% Revenue +/- 2%-points +/- 2%-points Segment At the mid-point of the At the mid-point of the revenue guidance: revenue guidance: Result Margin ~15% ~17% Investments in FY18 €1.1bn to €1.2bn D&
Slide 11: Table of Contents
Table of Contents 1 Infineon at a Glance 2 Quarterly Highlights 3 Growth Drivers 4 Selected financial figures 2017-11-14 Copyright © Infineon Technologies AG 2017. All rights reserved. 11
Slide 12: Q4 FY17 Group and Division Performance
Q4 FY17 Group and Division Performance Revenue: Segment Result: Segment Result Margin: IFX €1,820m (+9% y-y) €328m (+17% y-y) 18.0% ATV IPC PMM CCS [EUR m] [EUR m] [EUR m] [EUR m] 783 766 736 +8% 691 705 +18% 573 533 497 520 557 +4% +7% 321 328 279 264 293 18.8 16.3 17.5 23.2 22.0 16.2 16.2 16.7 15.
Slide 13: Last major step in completing IRF integration: fab in Newport sold to Neptune 6 Ltd.
Last major step in completing IRF integration: fab in Newport (Wales) sold to Neptune 6 Ltd. Key facts › Fab handed over on 29 September 2017 › Infineon and Neptune 6 have entered into a 2-years wafer supply agreement Strategic rationale › Economies of scale not competitive within Background: IR New
Slide 14: Major design-win achieved for µC AURIX 2G
Major design-win achieved for µC AURIX™ 2G of several hundred million Euros over lifetime AURIX™ 2G key features Platforms addressed by the design-win › performance: supported by hard- › powertrain coded algorithms › ICE transmission › power consumption › xEV motor control › scalability: wide range
Slide 15: Material-specific advantages of gallium nitride HEMTs vs silicon-based MOSFETs
Material-specific advantages of gallium nitride (GaN)-based HEMTs vs silicon-based MOSFETs CoolGaN™ vs CoolMOS™ positioning Initial use case #1: Initial use case #2: › lower switching and on-state › higher switching frequency (> 300 kHz) efficiency losses over a wide range of load scaling down the
Slide 16: Infineon launched first GaN-based product: 600 V CoolGaN power switch
Infineon launched first GaN-based product: game-changing 600 V CoolGaN™ power switch 600 V CoolGaN™ selected by Eltek for Flatpack2 SHE (super high-efficient) 3 kW AC-DC power conversion module for data center and telecom applications data center base stations Flatpack2 SHE telecom central office Co
Slide 17: Table of Contents
Table of Contents 1 Infineon at a Glance 2 Quarterly Highlights 3 Growth Drivers 4 Selected financial figures 2017-11-14 Copyright © Infineon Technologies AG 2017. All rights reserved. 17
Slide 18: Reference to web presentations
Reference to web presentations 10 Oct 2017: ATV Division Call by Peter Schiefer, Division President Automotive www.infineon.com/atv-call 29 Jun 2017: PMM Division Call by Andreas Urschitz Division President Power Management & Multimarket www.infineon.com/pmm-call 11 May 2017: Deutsche Bank AutoTech
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 2016 – 2021** by Semiconductor Industry Segment Automotive 8.2% $32bn* Industrial 6.8% $44bn* Data Processing 6.7% $112bn* Consumer 6.6% $36bn* Total Semi Market 6.2% $352bn* Communications 4.8% $129bn* Chip Card IC
Slide 20: 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 ideally Most balanced portfolio with sensors, micro- positioned to con
Slide 21: Infineon's position in the automotive semiconductor universe
Infineon's position in the automotive semiconductor universe Automotive semiconductors 2016 total market size: $30.2bn NXP* 14.0% Market share trend Infineon 10.7% +0.3%-pt – Infineon benefits disproportionately Renesas 9.8% from the two mega trends Texas Instr. 7.8% – clean cars STMicro 7.4% – ADAS
Slide 22: 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 secu
Slide 23: ADAS/AD semi growth driven by radar and camera sensor modules
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 $190 $110 $70 $230 $190 $180 $195 $90 $0 $20 $150 $40 radar
Slide 24: Infineon's product portfolio fosters revenue growth in ADAS/AD for the next decade
Infineon's product portfolio fosters revenue growth in ADAS/AD for the next decade Today 2020 2025 Driver $ $ $ $ $ Monitoring Front $ $ $ $ $ Rear/surround $ SiGe 77 GHz $ $ $ $ $ $ $ $ SiGe 24 GHz $ $ $ $ $ $ $ $ RF CMOS $ $ $ Sensor fusion $ $ $ $ Others Lidar $ $ $ $ $ Actuators $ $ Sense Comput
Slide 25: 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 › start-stop Grams CO2
Slide 26: 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 sensors sensors ICE power* power*
Slide 27: 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 28: Power semiconductor demand for different levels of electrification
Power semiconductor demand for different levels of electrification incremental power semi 400 V .. 800 V content for drive train EV, Fuel Cell EV - energy recovery ~$300 Plug-in HEV - onboard charger Full HEV - start-stop start-stop only - energy recovery - start-stop - coasting, sailing Hybrid - en
Slide 29: Infineon has all elements and unparalleled package expertise for all xEV applications
Infineon has all elements and unparalleled package expertise for all xEV 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 2017-11-14 Copyrigh
Slide 30: 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 31: 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 ideally positioned to gain Addressing broadest range of applications further market share and earn 300 mm
Slide 32: 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 33: 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 enable growth in SiC above aver
Slide 34: 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 35: 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 36: 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 37: 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 (31.1%) › 60 GHz radar sensors e.g. for silicon microphones for gesture sensing › REAL3™ image sensor for › World’s best signal-to- (example: Google Soli) AR/VR applications
Slide 38: Growth in RF & Sensing is driven by broader product portfolio and emerging applications
Growth in RF & Sensing is driven by broader product portfolio and emerging applications 2016 2021 SiMic RF discretes SiMiC/ambient sensors RF discretes 3D image sensor radar ICs TAM: $5bn* industrial consumer TAM: $1.5bn* smartphone smartphone * Infineon estimates › SiMic: Integrating additional amb
Slide 39: 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 MEMS Compound semis › Scale and technology leader in power MOSFETs › Broadest portfolio: 25V – 900V › Addressing all applications › #1 holding ~1/3 of
Slide 40: 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* #1 in embedded digital security** Infineon is ideally positioned to Complete portfolio of hardware, software, benefit from the services and turnkey solutions growth trends in the security
Slide 41: 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 42: Infineon is the leading supplier of eSIM for emergency call (eCall) system for cars
Infineon is the leading supplier of eSIM for emergency call (eCall) system for cars eSIM › Emergency call function (eCall) will be mandatory for all new registered cars in the EU as of 31 March 2018 › Infineon is world’s leading supplier of embedded SIMs (eSIMs) used for eCall function Courtesy: Aut
Slide 43: 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 44: Table of Contents
Table of Contents 1 Infineon at a Glance 2 Quarterly Highlights 3 Growth Drivers 4 Selected financial figures 2017-11-14 Copyright © Infineon Technologies AG 2017. All rights reserved. 44
Slide 45: OPEX level right on target
OPEX level right on target S and G&A* R&D** [EUR m] 208 209 206 196 200 195 200 196 192 189 180 15% 175 150 14% 125 13% 100 11.9% 11.8% 12.2% 75 11.7% 12% 11.4% 11.3% 10.7% 10.9% 50 10.6% 11% 10.4% 25 0 10% Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 FY16 FY17 FY17 FY16 FY17 FY17 General & Administration Selling
Slide 46: Increase in trade payables due to high investments
Increase in trade payables due to high investments Working capital* Inventories [EUR m] [EUR m] [days] 1,191 1,249 1,228 1,245 1,240 1200 120 1000 865 922 822 1000 739 100 800 800 100 107 99 99 80 621 600 98 600 60 400 40 400 200 20 200 0 0 0 Q4 FY16Q1 FY17 Q2 Q3 Q4 FY17 Q4 FY16 Q1 FY17 Q2 Q3 Q4 FY1
Slide 47: Investments between €1.1bn and €1.2bn due to strong underlying growth in demand
Investments between €1.1bn and €1.2bn due to strong underlying growth in demand Investments* D&A [EUR m] 1,100 – 1,200 1,022 1000 30% ~880 826 833 812 785 760 800 668 20% 600 15.5% ~14.9% 514 12.8% 466 12.9% 378 11.9% 11.4% 400 14.5% 13.1% 13.5% 12.1% 11.5% 10% 9.8% 200 0 0% FY13 FY14 FY15 FY16 FY17
Slide 48: Gross and Net Cash increased due to strong Free Cash Flow
Gross and Net Cash increased due to strong Free Cash Flow Liquidity development [EUR m] 1,834 1,769 618 1,859 471 2,043 358 2,017 2,240 2,209 2,049 2,217 2,452 166 32 Q4 FY16 Q1 FY17 Q2 Q3 Q4 FY17 Gross Cash Debt Net Cash › Free Cash Flow from continuing operations was €249m. › Debt decreased by €25
Slide 49: 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] €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 Sep 2018 payment
Slide 50: Part of your life. Part of tomorrow. Infineon
Part of your life. Part of tomorrow. Infineon
Slide 51: 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 52: 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 2016: 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 53: Financial calendar
Financial calendar Date Location Event 15 – 16 Nov 2017 Barcelona Morgan Stanley TMT Conference 28 – 29 Nov 2017 Scottsdale, AZ Credit Suisse TMT Conference 09 – 10 Jan 2018 New York Commerzbank German Investment Seminar 31 Jan 2018* Q1 FY18 Results 22 Feb 2018 Munich Annual General Meeting 26 – 28
Slide 54: 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 55: 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 BoM bill of
Slide 56: Institutional Investor Relations contacts
Institutional Investor Relations contacts Dr. Jürgen Rebel Corporate Vice President +49 89 234-21626 Investor Relations juergen.rebel@infineon.com Joachim Binder Senior Director +49 89 234-25649 Investor Relations joachim.binder@infineon.com Holger Schmidt Senior Manager +49 89 234-22332 Investor Re
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