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Author | Chai Xuchen
Editor | Zhou Zhiyu
The global electric vehicle market's cold wave has also brought chills to the giants in the industry chain.
On August 5th local time, the &#34;leader&#34; in the automotive semiconductor market, Infineon, took the initiative to start a large-scale layoff. CEO Hannes Beck announced a global reduction of 1,400 positions and plans to relocate over 1,400 additional people to countries with lower labor costs. This is due to the company's financial performance falling short of expectations.
According to Infineon's third-quarter report for the 2024 fiscal year (April-June 2024), all financial data for the quarter saw significant declines. Revenue reached 3.702 billion euros, a 9% year-on-year decrease; net profit plummeted by 51.78% year-on-year to 403 million euros.
Furthermore, Infineon is not optimistic about the upcoming market, as it has lowered its full-year revenue forecast for the third time, from the initial 17 billion euros to 15 billion euros.
During the financial report meeting, Hannes Beck admitted that &#34;the cyclical bottoming process is unfolding, and layoffs are also part of the previously announced cost-saving plan.&#34; Not only layoffs, but recently Infineon also &#34;shelved&#34; two backend manufacturing plants and sold them for $64.22 million.
Tightening the belt is largely due to Infineon feeling the lack of growth on the demand side, with its inventory pressure rapidly rising.
Currently, the global electric vehicle penetration rate has not met expectations, especially with the continuous soft demand in the European and American automotive markets. This has led to giants such as General Motors, Mercedes-Benz, and Porsche abandoning their previously set electric vehicle sales targets, and the transformation fluctuations have thus been transmitted to the upstream industry chain.
&#34;Western car companies have changed their transformation timetable, with some customers delaying orders, leading to inventory levels exceeding end demand in many regions,&#34; said Hannes Beck during the financial report meeting.
Not only Infineon, but also the second and third-ranked NXP and STMicroelectronics have seen declines in revenue and profit margins, with the latter experiencing a 25.3% decline in revenue in the second quarter; even tail-end companies have not been able to survive the period of great change. According to consulting firm Falkensteg data, in the first half of this year, 20 German automotive parts suppliers with annual revenues exceeding tens of millions of euros have applied for bankruptcy, a 60% increase year-on-year.
It is worth noting that among Infineon's four business segments, the automotive sector is the core source of revenue, contributing 57% of the company's revenue in the previous quarter. Therefore, even though it is in a leading position in the industry, it still has to adjust its posture.
Research firm IDC data shows that the global automotive semiconductor market achieved revenue of $69.2 billion last year, with Infineon ranking first with a 13.9% share. Its flagship product, automotive microcontrollers (MCUs), appears in almost every key system of automobiles, including powertrains, electrical/electronic architectures, advanced driver-assistance systems (ADAS), radar, and chassis.
Fortunately, amidst the chill, the Chinese market still brings positive signals to Infineon.
Hannes Beck pointed out that new energy vehicles in China are still continuing to popularize, with strong consumer demand, which will help boost Infineon's performance. Last year, Infineon's market share in the Chinese automotive semiconductor market reached 13.8%, still maintaining its leading position
Industry insiders pointed out that due to the difficulty and long cycle of automotive-grade MCU certification, coupled with the slow update and iteration speed of MCU chips, Tier1 suppliers and vehicle manufacturers tend to stick with suppliers who can provide stable solutions, resulting in fewer supplier changes. This largely determines the long-term stability of the global automotive-grade MCU market, with major players such as Infineon and NXP holding absolute dominance.
However, with the changing times, even in the high-growth Chinese electric vehicle market, Infineon is beginning to face pressure from domestic suppliers eating into their market share.
Nowadays, competition in the Chinese electric vehicle market has entered a challenging phase, where OEMs are urgently seeking cost reduction and the pace of intelligent iteration is constantly increasing. Supply chain sources revealed, &#34;The market competition is too fierce, products that sold well one or two years ago are now considered expensive by customers.&#34;
This has brought opportunities for domestic MCU &#34;replacement&#34; players.
CITIC Securities pointed out that since 2018, domestic manufacturers have entered the field of mid-to-low-end automotive-grade MCU chips, achieving stable mass production; in the mid-to-high-end segment, represented by firms such as UNISOC and Chipone Technology, manufacturers have gradually made technological breakthroughs and have the initial ability for domestic substitution.
Last year, including UNISOC, JF Technology, Chipone Technology, BYD Semiconductor, and Chipone Technology, all achieved shipment volumes of over one million units. Under the influence of intensified competition, the situation where overseas giants monopolize the global automotive-grade MCU market may soon be reversed.
However, domestic substitution in this field still requires time. The China Electronic Enterprises Association pointed out that the current domestication rate of automotive chips in China is about 8%, with the self-sufficiency rate of core chips for automotive-grade MCUs being less than 5%.
As the leading player among the &#34;Big Three&#34; in the European semiconductor industry, Infineon, which originated from the semiconductor division of Siemens, must timely adjust its posture and revenue structure according to market changes.
If it can accelerate the pace of enhancing product competitiveness, it still has the opportunity to share this market with domestic players and improve its own profit stability. This is also listed as a key focus by Hannibal, &#34;In addition to managing the current demand cycle, we are also working to further enhance competitiveness.&#34;
In the face of the huge changes in the global and Chinese automotive markets, opportunities and crises always coexist. Infineon must accelerate its pace of transformation to maintain its crown

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- Infineon, a key player in the automotive semiconductor market, announced significant layoffs and plans to relocate employees due to lower-than-expected financial performance.
- The company's Q3 FY2024 financial report showed a 9% revenue decline and a 51.78% drop in net profit, leading to a third reduction in annual revenue expectations.
- Despite challenges in the global electric vehicle market, particularly in Europe and the US, China's market presents a positive outlook for Infineon, aiming to boost performance amidst increasing competition from domestic suppliers.

The king of automotive semiconductors is more dependent on China now