Infineon to cut 1,400 jobs; says EV slump recovery 'not yet in sight'

Infineon Technologies CEO Jochen Hanebeck said a full-scale recovery from a slump in electric vehicle demand is "not yet in sight" as he laid out plans to cut 1,400 jobs.

The German chipmaker reported disappointing third-quarter sales, dashing investors' hopes of a long-awaited market rebound.

The company's revenue dropped 9.5 percent to €3.7 billion ($4 billion) in the quarter from the same period a year ago, falling short of the €3.79 billion that analysts had been expecting. The company also projected full-year sales that slightly missed estimates.

Infineon is among the European chipmakers that specialize in making the type of chips used in cars and the supplier has grown especially dependent on automakers for their sales.

The company, alongside peers STMicroelectronics and NXP Semiconductors, has been reeling from the auto industry's pullback from EVs — a retreat driven in turn by higher interest rates, weaker-than-expected economic growth and a persistent lack of charging stations.

"I'm very confident on the structural growth drivers, but on the cycle in all the different markets, the visibility at this point in time is low," Hanebeck said in a call with investors. "That's why we are cautious."

Sales from the chipmaker's automotive business, its largest, were €2.11 billion in the third quarter. That compared with €2.13 billion a year earlier but was a sequential improvement from the last quarter, a gain that the company attributed to software-defined vehicles.

These cars use Infineon's chips to help run systems that connect sensors and computers inside vehicles.

"China sees healthy consumer demand, which helps us, particularly given our No. 1 automotive market position there," Hanebeck said in the call.

The company expects its division that connects and and controls IoT devices and its power and sensor unit that's focused on energy efficiency to outperform the group. The first unit is already seeing a glut of inventory come down, while the surge in demand for AI systems is driving growth in the second, Hanebeck said.

In May, Infineon announced a "structural improvement" program focused on bolstering manufacturing productivity. As part of the program, Infineon has closed two small manufacturing sites in Asia and plans to cut jobs.

Chief Financial Officer Sven Schneider said the program would take a while to kick in.

"I would consider it a more back-loaded exercise," he said in the call, saying it would deliver "high triple-digit million euro margin improvement" in the first half of 2027.