Source: Investing.com transcript (published 05/06/2026); call date Wednesday, May 6, 2026 (CET morning). Participants: Jochen Hanebeck (CEO), Dr. Sven Schneider (CFO), Florian Martens (CCO).
Florian Martens, CCO: Good morning, ladies and gentlemen, and welcome to our conference call regarding the results of the second quarter of fiscal 2026. Representing the Infineon management board at this conference are, as usual, Jochen Hanebeck, Chairman of the Board of Management, and Dr. Sven Schneider, Chief Financial Officer. Mr. Hanebeck will first provide you with an overview of the business performance and the outlook. Afterwards, both members of the management board will be available to answer any questions you may have.
Jochen Hanebeck, CEO: Thank you very much, Florian. Hello, and a warm welcome from me as well. Esteemed listeners, after 10 days in space, the Artemis II mission returned to Earth about three weeks ago. The successful mission has once again proven that Infineon semiconductor solutions function reliably in all situations, even under the extreme conditions of space. We're also seeing success on our planet — a broader upswing across many end markets is clearly on the horizon. We are seeing rising demand in several key markets. While geopolitical conflicts continue to weigh on people and markets, our business indicators such as order intake, delivery times, cancellation rates, and inventory levels are showing a significantly improved picture.
In the field of artificial intelligence, momentum continues to grow, with positive ripple effects on adjacent sectors. The market development in industrial applications is being supported by rising demand for energy infrastructure. In the automotive sector, order intake is rising as customers begin to replenish their low inventory levels. However, electromobility remains in difficult waters while we are seeing a positive global trend in software-defined vehicles. Overall, demand in our end markets is improving significantly. We are preparing for a broad-based upswing.
Our company generated revenue of EUR 3.812 billion in Q2 of fiscal 2026, a 4% increase over the previous quarter and 6% year-over-year, and over 14% on a currency-adjusted basis. Segment earnings reached EUR 653 million, with a segment earnings margin of 17.1%, down from 17.9% in the previous quarter. This reflects on the one hand the positive effects of rising volumes; on the other hand, the usual price adjustments that take effect at the beginning of each calendar year. In addition, a decline in the high-voltage business in the automotive segment and costs associated with its realignment created significant headwinds.
The recovery momentum is clearly evident in our order backlog. This rose by EUR 4 billion quarter-on-quarter to around EUR 25 billion at the end of March — a year-over-year increase of around 25%. To the extent that our capacities allow, we are now confirming customer orders well into the next fiscal year. Free cash flow in Q2 was minus EUR 63 million, following minus EUR 199 million in the previous quarter.
In Automotive, we defended our global leadership position in automotive semiconductors for the sixth consecutive year in 2025 (TechInsights data). Automotive achieved a slight increase in revenue to EUR 1.83 billion during the reporting period. Segment earnings were EUR 331 million, with a margin of 18.1%, down from 22.1% in the previous quarter — attributable to charges related to our high-voltage power semiconductor business for electric powertrains, as well as price adjustments.
Market pressure is particularly pronounced for high-voltage power semiconductors for the electric powertrain. Intense competition, driven in part by significant expansion of manufacturing capacity and shifting attitudes toward e-mobility promotion, has led to prices and volumes falling faster than expected. The profitability level in our automotive high-voltage business is unacceptable to us, so we are fundamentally realigning it — restructuring back-end production of automotive power modules at the Warstein site (announced in November) and taking further targeted measures to reduce operating costs, including streamlining our portfolio. This is also an opportunity to reallocate available front-end capacity to our rapidly growing business in the AI data center segment, where demand continues to significantly exceed supply. High-voltage accounts for about 7% of automotive revenue.
Green Industrial Power recorded revenue of EUR 403 million, up 15% quarter-over-quarter, driven by energy infrastructure, HVAC and home appliances. Segment earnings improved to EUR 47 million, an 11.7% margin, up from 8.9%. We're seeing signs of broader economic recovery: inventory levels in the supply chain are reaching low levels and order intake is picking up significantly. Structural growth is coming from power grid modernization, energy storage, and AI data center demand for uninterruptible power supplies and cooling. We're seeing strong demand for solid-state transformers and have built a robust design pipeline. Power & Sensor Systems revenue reached EUR 1.26 billion, up 8% quarter-over-quarter, driven primarily by power supply solutions for AI data centers and radar sensors for automobiles. Segment earnings rose to EUR 257 million, a margin of 20.4%, up from 17.4%.
Sustained high levels of investment in AI data centers are driving demand. Currently, our AI-related business is in allocation. We're shifting spare manufacturing capacity from other areas while ramping up new capacity as quickly as possible. We therefore confirm our revenue forecast for power solutions for AI data centers of EUR 1.5 billion in this fiscal year, as well as EUR 2.5 billion in fiscal 2027, despite a weaker U.S. dollar. A key milestone is the ramp-up of gallium nitride solutions for AI data centers — we're already supplying increasing volumes to select customers. Demand for silicon carbide solutions from AI-related applications is also very strong. The semiconductor value per kilowatt of installed power has now risen further to around $175 (range $100-$250), replacing our previous addressable market forecast of EUR 8-12 billion.
Connected Secure Systems revenue of EUR 319 million remained virtually unchanged from the previous quarter. Segment earnings declined to EUR 18 million, a margin of 5.6%, down from 7.2%. The shift from IoT to Edge AI is opening new opportunities, and there is growing demand for our Secure Element to safeguard data integrity in servers.
Effective July 1, we will be changing our divisional structure from 4 to 3 divisions: Automotive, Power Systems (PS), and Edge Systems (ES). PS combines GIP and the power business of PSS; ES brings together the current CSS division as well as PSS's sensor, high-frequency and USB business. The ams-OSRAM sensor portfolio will also become part of Edge Systems; we expect to complete the acquisition this quarter. Based on 2025 figures, this corresponds to roughly 50% Automotive, 30% PS, and 20% ES.
On the outlook: the upswing is gaining momentum and scope. We are therefore raising our full-year forecast despite unfavorable currency movements (USD/EUR assumption adjusted from 1.15 to 1.17). For the current June quarter, we expect revenue of approximately EUR 4.1 billion, about 8% growth versus the prior quarter, with a segment profit margin improving into the high-teens percentage range as volume, positive pricing in the AI sector, and declining vacancy costs offset rising costs for energy and precious metals. For fiscal 2026, we now expect revenue of more than EUR 16 billion (vs ~EUR 14.7 billion in 2025) and a segment profit margin of around 20%, previously high single digits [i.e., guided up].
On investments, we continue to plan CapEx of approximately EUR 7.2 billion for the current fiscal year, including around EUR 500 million of accelerated investments for AI data center power supply solutions. The Smart Power Fab in Dresden will be officially opened on July 2. We are raising our forecast for reported free cash flow to approximately EUR 1.25 billion, up from EUR 1 billion, and adjusted free cash flow to around EUR 1.65 billion, up from EUR 1.4 billion.
Operator: [Q&A — selected]
Hakan Ergun (Thomson Reuters): Are you fully booked through the next fiscal year?
Jochen Hanebeck: In some areas we see an upcoming allocation, especially in all product groups that go into AI power supply solutions and potentially other markets. There we are doing all we can to expand capacities. The 300-millimeter fabs really have a very high capacity utilization.
Joachim Hofer (Handelsblatt): The EUR 16 billion forecast is roughly 10% growth — correct? And what about helium supply?
Jochen Hanebeck / Sven Schneider: Yes, that is correct. On helium: the industry has learned its lessons from past crises with a multi-sourcing strategy; from our current standpoint, we don't have any material effects. We have been witnessing price increases for copper, gold, gases, and logistics, but they are factored into our outlook.
Joachim Hofer: Can you explain the high-voltage business realignment in more detail?
Jochen Hanebeck: The high-voltage products — inverters in particular, moving from IGBTs to silicon carbide — are under substantial price pressure, especially in China where IGBTs are increasingly manufactured. This, coupled with a drop in worldwide volumes (the U.S. market has basically collapsed), is driving revenue and idle costs up. The front-end wafer capacities can be repurposed or rededicated quickly, for instance into AI applications. This is why we are taking measures in Warstein and looking at our portfolio; certain product families may be put on the back burner. We believe in the mobility trend, but we will not chase market share at any cost — our focus is on profitable growth.
Operator: This closes the Q&A session. Infineon raised its full-year forecast to more than EUR 16 billion revenue and a segment profit margin of around 20%, and will transition from four to three business divisions.