Infineon Technologies Ag · XETR:IFX
Infineon Technologies — FY2022 Earnings Presentation
41 slides from Infineon Technologies's earnings presentation, Nov 15, 2022
Slide 1: Decarbonization + Digitalization = More Sustainable Value!
Decarbonization + Digitalization = More Sustainable Value! Infineon Technologies AG 15 November 2022 1
Slide 2: Agenda
Agenda 01 02 03 04 FY22 and Upgraded Target FY23 and Q&A Q4 highlights Operating Model Q1 outlook Strategy & Value Creation 2022-11-15 Copyright © Infineon Technologies AG 2022. All rights reserved. 2
Slide 3: FY22 was a record year building the base for an upgraded Target Operating Model
FY22 was a record year building the base for an upgraded Target Operating Model New management Accelerating business Record financial board momentum results 2022-11-15 Copyright © Infineon Technologies AG 2022. All rights reserved. 3
Slide 4: FY22 was a record year building the base for an upgraded Target Operating Model
FY22 was a record year building the base for an upgraded Target Operating Model Record financial results Revenue €14.2bn (+29% y-o-y) New management Accelerating business SRM 23.8% (+510bps y-o-y) board momentum Free Cash Flow €1.6bn (+5% y-o-y) 2022-11-15 Copyright © Infineon Technologies AG 2022.
Slide 5: Group financial performance: four consecutive quarters of revenue growth and margin expansion leading to record FY22
Group financial performance: four consecutive quarters of revenue growth and margin expansion leading to record FY22 Revenues and segment result Y-o-y revenue increase supported by +29% 14.2 Volume Currency Price/Mix 11.1 +38% 4.1 3.6 Order backlog 3.2 3.3 3.0 42 43 37 23.8% 29 31 25.5% 18.7% 22.7%
Slide 6: All four segments: Growth and noticeable margin expansion
All four segments: Growth and noticeable margin expansion Automotive Industrial Power Control Power & Sensor Systems Connected Secure Systems (ATV) (IPC) (PSS) (CSS) Rev +35% Rev +16% Rev +25% Rev +30% SRM +650bps SRM +370bps SRM +270bps SRM +770bps 6.5 4.8 4.1 3.3 1.8 1.8 1.5 1.4 22.9% 27.9% 16.4%
Slide 7: Strong operating cash flow improvement enabling high organic investment and deleveraging
Strong operating cash flow improvement enabling high organic investment and deleveraging [€ bn] Liquidity profile Free Cash Flow 4.0 Gross Cash €3.7bn +0.9 Gross Debt €5.7bn 3.1 2.3 Net Debt €2.0bn 1.5 1.6 1.7 Leverage profile Gross Debt/ 1.3x EBITDA Net Debt/ 0.4x Operating Investments Free Cash Op
Slide 8: Upgraded Target Operating Model: committing to more ambitious financial goals and being the sustainability leader
Upgraded Target Operating Model: committing to more ambitious financial goals and being the sustainability leader Target Operating Model through cycle Previously Revenue growth >10% 9%+ Segment Result Margin 25% 19% Invest-to-sales Adj. Free Cash Flow Margin1 10-15% 13% Sustainability leader – CO2 n
Slide 9: Decarbonization and Digitalization accelerating structural growth of target markets
D E C A R B O N I Z AT I O N D I G I TA L I Z AT I O N … are accelerating structural growth of Infineon’s target markets 2022-11-15 Copyright © Infineon Technologies AG 2022. All rights reserved. 9
Slide 10: Total addressable market for semiconductors (TAM)
D E C A R B O N I Z AT I O N D I G I TA L I Z AT I O N … are accelerating structural growth of Infineon’s target markets Total addressable market for semiconductors (TAM) xEV Renewables Data center IoT CAGR CAGR CAGR CAGR +22% +17% +11% >10% CY22 CY27 CY22 CY26 CY22 CY26 CY22 CY26 Based on or includ
Slide 11: Leader in Power Systems and IoT
D E C A R B O N I Z AT I O N D I G I TA L I Z AT I O N … are accelerating structural growth of Infineon’s target markets Total addressable market for semiconductors (TAM) xEV Renewables Data center IoT CAGR CAGR CAGR CAGR +22% +17% +11% >10% Leader in Power Systems and IoT CY22 CY27 CY22 CY26 CY22 C
Slide 12: Leader in Power Systems: holistic system approach delivering maximum value to customers
Leader in Power Systems: Infineon enabling decarbonization by delivering maximum value to customers with holistic system approach Electric vehicle Solar inverter Server power Inverter – BMS – OBC – DC/DC DC/DC – DC/AC AC/DC – DC/DC – PoL – Power stage Si/SiC/GaN Controller Driver IC Power switch Sof
Slide 13: Infineon is the key enabler for Power Systems: Renewable energy generation
Infineon is the key enabler for Power Systems that are needed at every step of the entire power transformation chain Renewable energy generation #1 semi enabler powering ~50% of currently installed wind/solar capacity Based on or includes research from Omdia: Power Discrete and Module Market Tracker
Slide 14: Infineon is the key enabler for Power Systems: Energy infrastructure
Infineon is the key enabler for Power Systems that are needed at every step of the entire power transformation chain Energy infrastructure #1 semi enabler for ~2/3 of grid infrastructure incl. EV charging Based on or includes research from Omdia: Power Discrete and Module Market Tracker – 2021. Sept
Slide 15: Infineon is the key enabler for Power Systems: Energy conversion and usage
Infineon is the key enabler for Power Systems that are needed at every step of the entire power transformation chain Energy conversion and usage #1 semi enabler broadest portfolio covering all verticals leader in power density and efficiency #1 in vehicle electrification Based on or includes researc
Slide 16: Transition to WBG will vastly differ by application with Si expected to remain technology of choice
Transition to WBG will vastly differ by application with Si expected to remain technology of choice for many of them 2020 2030 xEV High power EV Charging SiC with advantage in high power switching Energy Solar Storage performance and power density Systems On-board Charger GaN superior switching perf
Slide 17: 30% market share target in SiC by end of decade underpinned by significant capacity expansion
30% market share target in SiC by end of decade underpinned by significant capacity expansion 10x Increase by 2027 vs. today Villach Kulim Infineon is well positioned for strong SiC market growth Steep ramp enables market share gains ~ €3bn total capacity ~ €1bn total capacity FY25e FY27e Villach Ku
Slide 18: With its comprehensive SiC strategy Infineon is mastering all key success factors
With its comprehensive SiC strategy Infineon is mastering all key success factors SiC raw material Superior trench Packaging Deep system supply technology portfolio understanding › 4 qualified SiC wafer and › 1 – 2 generations ahead › Best-in-class in-house › Decades of experience in boule suppliers
Slide 19: SiC momentum further accelerating: significant new design-wins
SiC momentum further accelerating: significant new design-wins in auto, continuous leadership in industrial applications Most recent automotive SiC design-wins Most recent industrial SiC design-wins Stellantis US OEM Japanese OEM Close to €3bn design-win volume in last 4 months More than 3,600 activ
Slide 20: GaN: immense market opportunity with significant design-wins across key power applications
GaN: immense market opportunity with Infineon achieving significant design-wins across key power applications GaN market overview for power and RF (GaN-on-Si) applications GaN design-wins of around €1.5bn [USD bn] 3 Strong design-win momentum for power and RF applications CAGR 2,5 2.5 +52% RF RF 2 C
Slide 21: Infineon at the core of IoT – driving digitalization
Infineon at the core of IoT – driving digitalization by serving strongly growing multi-application markets Consumer IoT Industrial IoT Automotive IoT Connectivity Digital Real-world Software/ world applications Ecosystem Products: MCU – Connectivity (Wi-Fi, BLE, NFC) – Sensors – Security – Power sup
Slide 22: Software-defined cars accelerating our MCU growth
Software-defined cars will become a reality through architectural transformation accelerating our MCU growth Infineon’s MCUs to win big here Transition from domain architecture … … to full car computer Accelerated Infineon MCU growth Telematics Gateway ~2.5x Full Car Infineon’s MCU revenue growth Co
Slide 23: Infineon radar solutions leading the way for automotive and IoT applications
Infineon radar solutions leading the way for a broad range of automotive and IoT applications Infineon leading the automotive Infineon shaping the consumer IoT radar market for over 15 years with innovative radar solutions >50% #1 market share in radar MCUs today in radar ICs1 by 20262 Tracking New
Slide 24: Touch solutions and reconfirming Cypress revenue synergies
Infineon is enabling the ‘IoT at a fingertip’ with robust and reliable touch solutions and reconfirming Cypress revenue synergies Infineon as the leader1 in Touch-HMI We are fully on track to reach or even overachieve inherited through Cypress acquisition the announced Cypress revenue synergy target
Slide 25: Software allows for quick and flexible portfolio expansion and increases our profitability
Software allows for quick and flexible portfolio expansion and increases our profitability Efficient portfolio extension › Agile software development allows efficient derivates › Additional revenue potential – 4x faster growth in software than in hardware Higher profitability › More complete P2S off
Slide 26: Infineon serving all target markets as Leader in Power Systems and IoT
D E C A R B O N I Z AT I O N D I G I TA L I Z AT I O N … are accelerating structural growth of Infineon’s target markets Infineon serving all target markets as Leader in Power Systems and IoT Supported by … P2S From product thinking to Software capability Digital marketing and sales system understan
Slide 27: Double-digit growth ahead – five key applications account for ~60% of growth
Double-digit growth ahead – five key applications account for ~60% of growth; well-diversified divisional split FY22 FY22-27e Revenue by division Revenue growth contribution by driver E-Mobility CSS 13% Other ATV Renewables 45% ADAS >10% PSS €14.2bn CAGR Data center 29% IoT Through-cycle growth rate
Slide 28: Key investment projects to enable our growth
Key investment projects to enable our growth Kulim 3 Dresden 4 in construction planned WBG expansion for 300mm analog/mixed-signal SiC and GaN, incl. cold split and epitaxy and power switches 2022-11-15 Copyright © Infineon Technologies AG 2022. All rights reserved. 28
Slide 29: Dresden – a 300mm “smart power” fab
Dresden 4 – a 300mm “smart power” fab for analog/mixed-signal and power switches Investment/ ~€5bn Revenue potential Planned start of Autumn 2023 construction Assumed ready Autumn 2026 for production E-mobility BMS and MCU E-Mobility power supply Renewables Driver IC Other Renewables ADAS MCU power
Slide 30: Highly differentiating and successful product portfolio for new fab planned in Dresden
Highly differentiating and successful product portfolio for new fab planned in Dresden Power switches → Analog/mixed-signal ICs → Include significant shares of analog/power + some digital circuitry P r Controller ADC o COM Processor t Power Supply e Power Processor c Supply t Logic i Commu- o LD
Slide 31: Upgraded Target Operating Model: Significant margin expansion through the cycle
Upgraded Target Operating Model: Significant margin expansion through the cycle Former Upgraded FX System Portfolio Manu- OPEX scaling Currency Increased Pre-funding solutions & management, facturing costs system High twenties value-based technology/ productivity: solutions, pricing product mix 300
Slide 32: Free Cash Flow generation increasing over the cycle
Free Cash Flow generation increasing over the cycle, driven by profitable growth and better asset efficiency [€ bn] Operating cash flow strongly rising › Accretive investments 6 into high organic growth 5 › Operating cash flow expected to outgrow investments › Differentiated in-house 4 3 manufacturi
Slide 33: Putting it all together – Upgraded Target Operating Model leads to superior value creation
Putting it all together – Upgraded Target Operating Model leads to superior value creation Target Operating Model through cycle Reported RoCE to reach 2x cost-of-capital level Revenue growth >10% 12.6% Segment Result Margin 8.4% WACC 25% Adj. Free Cash Flow Margin1 10-15% FY21 FY22 FY23e FY24e FY25e
Slide 34: Our 2030 carbon neutrality goal is aligned with the Paris Climate Agreement’s 1.5 °C target
Our 2030 carbon neutrality goal is aligned with the Paris Climate Agreement’s 1.5 °C target CO2 burden1 CO2 savings2 3.0 million tons of CO2 equivalents Ratio ~1:33 ~100 million tons of CO2 equivalents Net ecological benefit: CO2 emissions reduction of more than 97 million tons On the road to carbon
Slide 35: Outlook for Q1 FY23 and FY23
Outlook for Q1 FY23 and FY23 Outlook Outlook Q1 FY231 FY231 Revenue ~ €4.0bn €15.5bn +/- €500m Adj. Gross Margin ~ 45% Segment Result Margin ~ 25% ~ 24% FCF/adj. FCF ~ €0.8bn / ~ €1.5bn Investments ~ €3.0bn D&A ~ €1.9bn2 Proposed dividend for FY22 32 ct/share 1 Based on an assumed average exchange r
Slide 36: More Sustainable Value!
D E C A R B O N I Z AT I O N D I G I TA L I Z AT I O N More Sustainable Value! 2022-11-15 Copyright © Infineon Technologies AG 2022. All rights reserved. 36
Slide 37: Key messages
Presenter: JH D E C A R B O N I Z AT I O N D I G I TA L I Z AT I O N More Sustainable Value! Key messages Unique position Leadership Significant Significant More profitable design-wins investment growth ahead in key markets with in Power Systems and in SiC and GaN underpin in analog/mixed-signal hig
Slide 38: Questions & Answers
Questions & Answers 2022-11-15 Copyright © Infineon Technologies AG 2022. All rights reserved. 38
Slide 39: Part of your life. Part of tomorrow.
Cinfineon Part of your life. Part of tomorrow.
Slide 40: Safe Harbor Notice
Safe Harbor Notice Disclaimer This presentation contains forward-looking statements and/or assessments about the business, financial condition, performance and strategy of the Infineon Group. These statements and/or assessments are based on assumptions and management expectation resting upon current
Slide 41: Appendix
Appendix 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' – 'Financial investments' – 'Assets classified as held for sale – ('Total Current