Good day, ladies and gentlemen. I'd like to welcome you to our conference call on the results of the second quarter of fiscal 2022. Participating at this conference are all of the members of the executive board of Infineon, Jochen Hanebeck, for the first time in his new role as CEO, Dr. Helmut Gassel, Chief Marketing Officer, Constanze Hufenbecher, Chief Digital Transformation Officer, Dr. Sven Schneider, Chief Financial Officer, and Dr. Rutger Wijburg, Chief Operations Officer. Mr. Wijburg, I am very happy to welcome you here to the executive board as a new member for the first time in this circle. My dear listeners, Mr. Hanebeck will start by giving you an overview of the business performance of Infineon, after which all five members of the executive board will be happy to answer any questions you have. Mr. Hanebeck, please.
Thank you, Mr. Foltin. Hello and welcome. Listeners, we're living in extraordinary times. The geopolitical and macroeconomic conditions have become gloomier in the last few months. The terrible war in Ukraine is continuing, and people's situations there is dramatic in many parts of the country. We all hope that the violence and suffering will come to an end soon. Infineon is fully supportive of the sanctions that were decided on immediately after the invasion began. We broke off all our deliveries to Russia, Belarus, and those parts of Ukraine which are supported by Russia. Infineon has a research and development site in Lviv on the far west of Ukraine, with about 200 colleagues. Their situation and their families have the maximum priority. Infineon is doing everything to support them and to provide for them in this situation.
We have great respect for the dedication of our colleagues, and they're doing everything they can to keep the site running in difficult times. The war is primarily a human tragedy. Furthermore, it has serious economic consequences. Certain raw materials and source of energy are becoming more difficult to obtain and more expensive. Of course, depending on the course of the war, the development could become even worse. The pressure of inflation is growing in most countries. Forecasts for growth are being corrected downwards. The lasting pandemic means there are considerable restrictions in delivery chains, as the situation in China shows. In this challenging environment, our business is doing well. In the second quarter, Infineon increased its revenue and segment results, and the demand in our key markets is still robust.
For our target application to automotive industry, renewable energies, data centers, IoT, and other sectors are subject to the limiting factor of delivery restrictions, especially on the part of contract manufacturers. The demand for our solutions and products exceeds the supply. The order books, the total of confirmed and unconfirmed orders increased from EUR 31 billion - EUR 37 billion in the first three months of the calendar year. This figure reflects the strong structural demand and to a certain extent, also cyclical bottlenecks. We therefore consider the order books as only just one of many parameters. For a comprehensive view of the situation, we also take into account lead times, cancellation rates, inventory reach, and delivery delays. These indicators show that the genuine demand remains strong.
We are also noticing a growing interest on the part of our customers to secure supplies with long-term contracts and capacity reservations. Our focus remains on the offer side. We're expanding our internal capacities, securing capacities with external manufacturing partners, and finding solutions for the challenges on the material and logistics side, such as, for example, shipping routes, in order to secure our ability to deliver to our customers as best as possible. The uncertainty of the global economic developments is increasing, but the most important long-term growth drivers for our business are completely intact and indeed are becoming stronger. Decarbonization and digitalization ensure that there's a lasting high demand for our products. Because of the imponderabilities in the energy market, renewable energies are growing in importance still. They can, must, and will make a major contribution to securing our independence in energy policy.
That target is on the agenda of most governments if it wasn't before. What is necessary from the point of view of climate policy is becoming geopolitically relevant. Infineon is consistently investing in its manufacturing landscape. In particular, the growing importance of silicon carbide and gallium nitride technologies. With the expansion of our capacity, such as our plant in Kulim, Malaysia, we have set the signals to be able to serve the demand in the long- term. At the same time, as a company, we are making a contribution to our target of climate neutrality. Since we've switched over to green power in Europe as long ago as 2021, our U.S. sites are following this year.
Our biggest manufacturing site in Austin, Texas, already obtains 100% of its electricity from renewable energy, and that is another important step in the way to our target of becoming climate neutral by 2030. Let us review the business of the second quarter. Infineon achieved a revenue of EUR 3,298 million, which is improvement over the previous quarter. Compared to the previous quarter, it's 2% up. The strong U.S. dollar supported the growth. With a constant exchange rate, it would have been 3% more the previous quarter and 17% compared to the same quarter of the previous year. The segment result also developed positively. It reached EUR 761 million, and the segment result margin improved slightly from 22.7% in the previous quarter to 23.1%.
All four divisions achieved a segment result margin of more than 20%. The free cash flow in the second quarter was EUR 120 million as planned after EUR 978 million in the previous quarter. The reduction which we'd expected affected the investments and the effects on operating capital. For the present quarter, we expect the free cash flow rising again. The results of the four divisions now. The automotive segment achieved revenue of EUR 1,491 million in the second quarter, which is an increase by 7% over the previous quarter. We also managed to use additional capacities and increase in all positive product groups. Positive effects were the pricing and the dollar exchange rate. These factors contributed to a considerably better segment result, which was EUR 324 million.
This meant that the segment result margin rose to 21.7% compared to 18.1% the previous quarter. The automotive industry is now going to its fourth year under more difficult global conditions. The trade conflicts in 2018 and 2019, the beginning of the Corona pandemic in 2020, the global shortage of chips in 2021, and now the war in Ukraine and the restrictions in China because of the pandemic. Delivery interruptions are putting pressure on car production throughout the world in all the regional markets. S&P Global adjusted its estimate from 86 million units in for the global production of cars, which is 10 million fewer than originally expected. You can see from the comparison how long it will take for the car market to recover.
All in all, the supply chain in the car industry is fragile with respect to semiconductor components. We need to make everything more resistant, which means they need to build up inventories because the demand for cars remains high. In addition, automated driving and electromobility are continuing their strong growth rates. In China, where subsidies for electric vehicles were reduced substantially at the end of 2021, the sales of new energy vehicles, which accounted for just under 20% in the market in the March quarter, remained high. In Europe, the market penetration of fully electric vehicles and plug-in hybrid vehicles in the first three months reached almost 16%. With its complete product and solution portfolio, which includes both silicon carbide, and gallium nitride technologies, Infineon is a major pioneer in this change, which is demonstrated by the success with our customers.
In the past quarter, we concluded two new orders for silicon carbides among Chinese car product producers and for the next generation of traction inverters and for onboard charging devices. The volume concerned is in the three-figure million range. In Industrial Power Control, we had EUR 430 million revenue, which is an increase of 13% compared to the weaker December quarter. In particular, the applications and automation, industrial drives, domestic appliances, and energy infrastructure developed strongly. With sales growth, the segment result came to EUR 93 million. The segment result margin was 21.6% after 19.1% in the previous quarter. We are aware of the macroeconomic uncertainties, but at the same time, market prospects for most of our target applications remain good. We're recording high new orders, and many product ranges are already in allocation.
Decarbonization is a strong structural driver for IPC's business in the fields of renewable energies and energy infrastructure. Another shot in the arm for growth can be expected from the governments in the efforts to obtain independence in energy. In domestic appliances, after the catching up in 2021, we're expecting a certain slackening off. The dynamism in the field of automation and industrial drives is intact and is supported by investment plans. In more and more industrial applications with our offer of silicon carbide solutions, we're successful because we can differentiate ourselves from the competition with that. There are many ambitious announcements in this competitive market, but let's look at the actual figures. The market research company, Yole Développement, estimates the value of silicon carbide components in 2020 at $1.1 billion.
We have over 20% here as a market share here, and we are growing twice as quickly as the market leader, and we are number two. What's important is that the growth in our silicon carbide business is not going at the expense of profitability. On the contrary, ongoing projects for industrial and car applications are providing tailwind. Our customers like the architecture and quality of our components, the breadth of our portfolio, our customer support. Supported by our excellent system understanding. Tomorrow, we'll be presenting our latest power semiconductor solutions at the Power Semiconductor trade fair, PCIM, in Nuremberg. I'd invite you to attend us on the spot or via webcast to get an up-to-date view of our market trends and solutions. You'll find all the information on our website. Let's now come to the Power and Sensor Systems segment.
Revenue was EUR 925 million, which is about 3% lower than in the very strong previous quarter, whereas the demand for components for our key applications remained high. Our ability to deliver was held back by the efforts to contain the pandemic in Shanghai and the results of restrictions in our distribution center there. The segment result declined to EUR 73 million. The segment result margin was 25%. In the previous quarter, it had been 29.8%. In addition to lower revenue, the delivery restrictions caused higher logistics costs as well. We have to bear in mind that cost increase on one hand and price rise on the other do not always take place at the same time. The demand for PSS solutions is robust, which can be seen by the new orders and the low inventories at distributors.
There are indications for a weakening of consumer devices like PCs and smartphones, but with limited effects for Infineon. What's more important from Infineon's point of view is the demand in the server business is strong. Both companies who are seeing their employees return to the office and also the cloud hyperscalers are continuing to invest in data centers. With our leading portfolio in the sector of power management, we are in a good position here. Our offer now includes power management systems for Intel Xeon processors of the next generation. Our solution provides not just outstanding performance, but also helps to improve the energy efficiency of data centers considerably. Now, the Connected Secure Systems segment. The division achieved revenue of EUR 448 million, which is 5% more compared to the previous quarter.
Microcontrollers for IoT applications in particular and solutions for payment transactions and government documents contributed to this positive development. The segment result came to EUR 108 million, which corresponds to a segment result margin of 24.1%, following 23.4% in the previous quarter. At CSS, too, demand continues to exceed supply. Capacity bottlenecks, especially in contract manufacturers, are limiting revenue potential. We expect that the bottlenecks will become worse in the near future. As far as profitability is concerned, our continued investments in research and development will lead to a further strengthening of our product roadmap and a short-term burden. Our focus remains on the revenue synergies from the Cypress acquisition, which we want to continue in the medium- to long-term.
Apart from that, the dynamism on the key markets is strong, and we are happy about the latest results with our customers. Leading manufacturers have chosen our microcontrollers and connectivity solutions for infotainment systems and in the next generation of car sector and also for wearable and smart home devices. In addition, we concluded important customer agreements in several regions for solutions in payment transactions and government documents. Now for the prospects. As I've explained, the prospects for our business depend on many factors. Economic imponderabilities are great. Geopolitical tension remains high. There is the pressure of inflation, growing interest rates, and all these are inhibiting growth. The pandemic and the war in Ukraine are also causing disruptions in supply chain and the supply of semiconductors is a sticking point in many industries, as many of our customers are experiencing bottlenecks.
We see that the balance between supply and demand will be reached earlier in some regions than in others. Our outlook for this fiscal year is mainly determined by the supply side. In the current third quarter, we expect about EUR 3.4 billion revenue, and the Segment Result Margin is likely to be around 21%. It's important to note that with our forecast, we assume that there will be no major further effects on our business, such as by suspension of deliveries in China or disturbances because of further energy embargoes. The exchange rate for the U.S. dollar to euro has been adapted from 1.15 so far to 1.10 now. For fiscal 2022 as a whole, we expect revenue of EUR 13.5 billion ±500 million.
Before that, we had expected revenue of EUR 13 billion in the midpoint of the revenue range. With the increased revenue outlook, this takes into account the positive effect of a strong U.S. dollar. According to rule of thumb, the effect of a strong dollar by five cents accounts for five billion euros for the remaining six months of the fiscal year. We expect that we'll see a growth rate of 22% improvement in revenue compared to the previous year. Regarding development profitability, we are confident. Our forecast for the segment result margin can be reinforced. In the midpoint of the revenue range, we expect to be more than 20% after about 22% previously. For fiscal 2022, we are still planning investments in tangible and intangible assets, including capitalized development costs of about EUR 2.4 billion.
The speed at which we can expand our manufacturing capacities depends on the lead times of the plant. Production equipment is rare, and there are not many suppliers. Our activities for the construction of the front-end module at our site in Kulim, Malaysia, in February, which is designed for silicon carbide and gallium nitride chips, is going according to plan. In free cash flow, we expect EUR 1.1 billion after EUR 1 billion previously. I'm glad to tell you it's twice. As I've already explained, the prospects in our business depend on many factors. The economic uncertainties are great. The geopolitical tension is increasing. Pressure from inflation and rising interest rates is inhibiting growth in macroeconomic terms. The lasting pandemic and the war in Ukraine are threatening further interruptions to the supply chain.
The provision of semiconductors, a sticking point in many industries, and many of our customers are still affected by bottlenecks. As we already noted three months ago, the dynamics in the different submarkets varies. In some, a balance between supply and demand will be achieved earlier, in others, it will be later. Our outlook for this fiscal year is determined still by the supply side. In the third quarter, in fiscal 2022, we expect revenue of about EUR 3.4 billion. The segment result margin will probably be about 21%. What is important is to note that in our forecast, we expect there will be no further noticeable disruptions of business, such as suspension of deliveries in China or major disturbances because of further energy embargoes.
We've assumed an exchange rate of U.S. dollar to the euro has been derived from 1.15-1.10. For the fiscal 2022 as a whole, we expect revenue of EUR 13.5 billion ±EUR 500 million. Before that, we'd planned revenue of EUR 13 billion in the midpoint of the revenue range. In the outlook, the positive effect of a stronger U.S. dollar is being contained. A rule of thumb, the effect of a stronger dollar is 5%, which accounts for about EUR 150 million revenue for the remaining six months of the fiscal year. In the midpoint of the range, that corresponds to a growth rate of 22% compared to the previous fiscal year. Regarding the development of our profitability, we are confident. Our guidance for the segment result margin can be reinforced.
In the midpoint of the revenue range, it is likely to be more than 22%, we'd said it would be about 22%. For fiscal 2022, we're still planning investments in tangible and intangible assets, including capitalized development costs of about EUR 2.4 billion. The speed at which we can expand our production capacity depends on the lead times of the plant. Production equipment is rare. There are only a few suppliers. Our activities in the construction of the new front-end module at our Kulim site in Malaysia, which announced in February, based on silicon carbide and gallium nitride chips, is running according to plan. In free cash flow, we expect a level of about EUR 1.1 billion, following about EUR 1 billion previously. Listeners, with that, I'd like to end my remarks. Together with
Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star followed by one on your keypad. Please ensure that your mute key is deactivated so that your signal can reach our system. Should you find that your question has already been answered, you can withdraw the question by pressing star two on your keypad. Once again, as a reminder, please press star one to ask a question. We're going to wait a moment to allow all parties enough time to indicate whether or not they would like to ask a question. Our first question comes from Stefan Kroneck from Börsen-Zeitung. Please go ahead, sir.
Hello, everyone. I have two follow-on questions. First of all, could you give us an assessment with respect to your annual forecast? Is this a new record year that you're striving for with respect to revenue and your result?
The second question that follows from that relates to the revenue-to-return ratio. If you look at your competitors, such as Texas Instruments, STMicroelectronics, NXP, and so on and so forth, they have higher revenue returns than Infineon does. STMicroelectronics, for example, has a quota of 25%. That's what they achieved in the past quarter. Mr. Hanebeck, I'd like to know, therefore, if you could explain this. Does Infineon have a problem with costs? Or could there be another reason why your competitors are slightly better than you in this area? Thank you very much.
Thank you, and good morning, Mr. Kroneck. Indeed, the revenue and result have reached record highs. They are in the midpoint of the guided range for the fiscal year underway. With respect to the gross margin and result, well, indeed, they are developing very dynamically at present.
I believe that here we see several effects coming to play. I don't believe that it has so much to do with costs, as it may have to do with pricing in the market, which is definitely disparate. For us, long-term customer relationships and existing contracts are an important reference. But I would also like to say that we have repeatedly stated in the market that our target operating model will be upgraded in this respect. We would prefer to do this at a point in our business development where the trend has normalized somewhat. Right now, we're in a very strong phase of projections and peaks. The troughs of the cycles from a historic point of view are not always a very accurate indicator. We will address this issue, but we will do this sustainably with a long-term view.
We are not a company that is interested in short-term window dressing. Thank you very much, says Stefan Kroneck. Once again, a reminder to ask a question, please press star one on your keypad. As we don't have any further questions right now, I would like to hand the floor back to Mr. Foltin for his concluding remarks.
Thank you. We have no more questions. With that, I close the Q&A session and turn it over to Mr. Hanebeck.
Thank you, Mr. Foltin. Listeners, despite difficult conditions, Infineon has had a strong quarter. We are seeing problems with the business environment for our company, which has become more difficult. At present, we see robust dynamism, most important applications of automotive industry and data centers and IoT. The demand continues to exceed supply, and in the upcoming quarters, we expect that this will continue into the next fiscal year as well. We also expect a strong fiscal year 2022, unless there are further major external disturbances. In the field of silicon carbide, in calendar 2021, we grew much more quickly than the market, and we have strengthened our position as a clear number two in the market. Our announced investments in building special production capacities in Kulim has been doubled.
Decarbonization and digitalization will shape the world in which we live profoundly in the years to come, and we are shaping this change actively, and we stand for profitable growth. Thank you for your interest. Stay healthy and goodbye.