Hello and welcome to the OTCQX Best 50 Virtual Investor Conference. On behalf of OTC Markets, we are pleased you have joined us. Today's presenters represent some of the top-performing companies on the OTCQX Best Market in 2025 based on share performance and volume. Our next presentation is from Infineon Technologies. If you wish to ask a question, please submit it via the Q&A box on your screen. Today, I'm excited to welcome Daniel Györy, Investor Relations at Infineon Technologies, which trades on the Deutsche Börse under the symbol IFX and on the OTCQX under the symbols IFNNY and IFNNF. Welcome, Daniel.
Thank you, Mike, for the kind introduction and good morning, everybody. Welcome to the Infineon slot. It's a pleasure today to speak at this distinguished conference, OTCQX Best 50. I would like to make this an interactive session, so I have brought a few slides as an introduction, but I wanna keep it short, and hopefully, we will have some exciting Q&As we can discuss later on. Let me start with our first slide. Infineon is a semiconductor company focusing on power, analog, and control. In many of our target markets, we have number one positions. I brought with me just a few examples. For example, in the automotive semiconductor market, we have a long-term number one position, confirmed again for the last year.
2024 is the most up-to-date numbers we have, 13.5% market share in the global automotive semiconductor market. Even more ahead we are on the power discrete and modules market. That means, specifically semiconductors that convert and transfer energy. Here, Infineon has a large market share advantage to the next player, and we have 17.4% of the total market share. Also, very recent, we got an update on the microcontroller market share data. Here also we could defend our number one position, not only on the global microcontroller market, but specifically also for automotive microcontrollers. One of the most interesting trends we are seeing right now is obviously artificial intelligence. This is going to be the next wave of transformation.
Today, we are seeing generative AI, which is, I think, more or less transforming into agentic AI, which means it can do even more complex tasks. All of those forms of AI of AI require huge amounts of power, reliable power, and that is happening on the data center, obviously. Large chunks of computers being built somewhere. There's another form of AI which is called physical AI, obviously. Here we have, for example, cars which drives themselves, but also we have the upcoming theme of robots, specifically humanoid robots, and also in this area, Infineon is very active, where I will bring you a few examples in the next slides. Let's look at the whole energy chain of AI.
We as Infineon look at AI from grid to core and even beyond into the realm of physical AI. For example, if you think about renewable energy generation, but also other forms of energy generation, this is the first step. You have, for example, battery backup systems or energy storage systems. For sure, in the future, you might have solid-state transformers, which is an interesting theme where we, I would say, change the market of traditional transformers, which today are mostly large chunks of iron, and we replace it by semiconductors, which means they can be more efficient, they can be easier installed, and they can be better fitted into the requirements of a data center. A very large chunk of our semiconductors today is already going into server rack conversion.
That means we have three stages to convert power from the grid and the voltage into the specific voltage requirements of an individual core that can be a GPU or a TPU. Also, as I said already on the physical AI side, there is quite some content we deliver with our semiconductor solutions. Let me show you just a few examples. I wanna talk quickly about renewable energy generation. I wanna highlight that we look at this purely from an economic perspective, and the data that is currently available shows that in most parts of the world, even today, renewable energy is just the cheapest form of energy.
Even, you can see this here on the right-hand side, even if you include energy storage in addition to solar for energy generation, it usually remains below most forms of traditional energy generations from a total cost perspective. I think looking at the current developments we see in the Middle East, it is also to be highlighted that renewable energy is not dependent on any other country. If you have solar or wind installations on site, there will be almost no possibility to disrupt this kind of energy generation. We see this as a very important part in enabling future AI data center, but also for sure all the other energy which needs to be provided to humankind. One more example. I guess you're seeing the right slide, I do hope.
One more example is energy storage systems. This is just a form of, I would say, grid, which allows, as I already told you, to store energy, which, for example, is provided by solar installations. This is a very nice example of all the content we as a semiconductor company have here. You can see that there is power content. For example, IGBT or silicon carbide power discretes and also modules. There is control and connectivity components like our microcontrollers, and there's analog components like driver components or voltage regulators.
You can see that today, I would say energy storage systems is a very small market, but after the fact that we have now many solar installations, and this has already reached a very high level. I would say that energy storage systems from our point of view is the next big growth market in that area. We think that we have quite some meaningful contribution to this kind of decisive technology. Coming back to the AI theme specifically, we have, I think, reached already today an impressive track record. Infineon is by far the number one in providing power semiconductors for AI data centers.
We have achieved around EUR 700 million of revenue last year, and we project to reach EUR 1.5 billion this year, and we already have given an indication for 2027, which is EUR 2.5 billion. I would say, since we gave this number, we haven't seen anything that would contradict our assumptions here, and this means within three years, we will have more than 10x increased our revenue share in AI data center, and it also means that we are growing much faster than any of our peers in that area. I know this is a complex topic. I still have brought one slide with me to show you a little bit what it actually means to supply the power for data centers.
Here's just an example of how a potential data center rack will look like in the future. You can see you basically have two racks. You have a power sidecar where you have so-called power supply units. This is quite a big number as such racks consume huge amounts of energy. In those power supply units, Infineon has significant content with our semiconductors. There's obviously the server rack itself, which includes not only the main boards but also the GPU cores. Here there is basically two important, I would say, stages of power conversion. There's the first stage power conversion, which we call intermediate power conversion, and then there is the second stage power conversion, which is done by so-called power stages. Excuse me.
Those power stages can be very, very decisive in how fast you can provide power to the required cores. Since the voltage of the GPU cores is very, very low, we are talking about voltages below one volt. You have enormous amounts of currents which need to flow through this energy conversion chain, and that requires highly specialized modules where Infineon is the clear market leader. Now let's move on to some other areas of AI. I already mentioned physical AI as potential growth fields, and here I have brought two more examples. The first example is the so-called software-defined vehicles, or as you know, cars are getting more complex, are getting more intelligent. Soon, I guess a certain portion of the cars will basically drive themselves.
You can already see today, to some extent in bigger cities in the U.S. One of the key ingredients is for sure, what Infineon offers. I wanna just bring two examples, microcontrollers and the connectivity. We bring microcontrollers and Ethernet to those cars which allow them to become smarter, more flexible, to handle more data that is processed within the car. The second example is actually so-called PROFET Smart Fuses. That is the replacement of traditional melting fuses with semiconductors which allow, let's say, a more flexible configuration of the power grid within the car. One example for that would be the BMW Neue Klasse.
This is a recent car that launched, and this already employs a large number of so-called smart switches, which allow also to replace the use or to use less cable. By using the smart power switches, the Neue Klasse saves roughly 600 m of copper cable, which makes the setup more flexible but also more efficient and lighter. The second example is obviously humanoid robots. Here I think this is again a very good overview of the Infineon portfolio. If you think of our portfolio and if you think of what is required in a humanoid robot, there's a huge I would say overlap in what is required. Most of the key components within such a robot that are based on semis we can provide.
This includes, and you can see here the examples, it includes obviously motor control microcontrollers. It includes the power switches per se. Each joint in such a robot requires a power switch, which allows to very granularly steer the movement. You have certain analog components like drivers and amplifiers. You have connectivity in a humanoid robot, be it Wi-Fi, Bluetooth, or other form of near-field communication. There's also some storage, some specialized storage. For example, NOR flash, which we provide for cars that can also be used in humanoid robots. There's obviously a vast array of sensors such a robot would have in comparison or depending on what the actual use field is. There's, let's say, more than one sensor in such a robot in any case.
On average, we assume give or take roughly $500 of content. That is for sure just a rough estimate, so it can be also higher, it can be a little bit less, but $500 is just a ballpark, and we believe that this will be a huge business opportunity once we see the broader launch of such humanoid robots. The last slide I want to show you is a bit about our production competence. I'm showing you here a slide which is basically four years old. I have not modified it. You will still find it on our 2022 November presentation. Okay, I have modified it very slightly because I have changed the opening to July 2026, which was previously autumn 2026.
This is the opening of our Dresden 300 mm Smart Power Fab. Four years ago we announced this, and we have started the construction. The slide is not really changed to four years ago, so you can see some of the focus areas from four years ago. This included stuff like battery management systems and MCU supply, driver for energy and grid, but most importantly, also data center. Here, for example, a power stage as a combination of MOSFET and driver IC was one of the key areas four years ago. This was a little bit before, I would say, artificial intelligence and ChatGPT became so famous. The interesting thing is already back then, data center was one of the key focus areas of this fab.
The good news is we are going to open this fab as planned even a little bit earlier. One of the reasons for that is that we currently see huge demand on the AI side from our customers that require our semiconductors to enable the power of such data centers. For us, this is really a good opportunity to ramp this fab fast. For sure, we have the flexibility now to make data center or specifically AI data center, a much larger part of that. I would say it's fair to say that the primary application with which we are ramping the fab now is going to be AI. With that, I would conclude my short presentation.
Just for your reference, for our full investor deck, which includes many more slides, you can visit our Infineon Investor Relations homepage, and, you can click through that. For sure, you can also contact the Investor Relations team for any further questions, specifically the ones we cannot answer today. If there's any more, please do not hesitate to contact us. Now, I see there are first questions coming in. Let me look at that. The first questions we have is, "Infineon is clearly leaning into mega trends like decarbonization, electrification, and AI. From a shareholder perspective, what do you see as the most underappreciated part of the strategy today?" Well, I guess in a way there are already some aspects, that I just told you which might not be fully appreciated.
We believe that Infineon indeed is in a unique position to serve some of those growth markets. That is not only AI power from a data center perspective, but it is also, as I said, the realm of physical AI. Everything that moves, taking AI to the edge, be it a car or a robot, which is from an architectural point of view, can be fairly similar, a car and a humanoid robot. I would say this is maybe an opportunity for us with regards to growth and also expanding our presence, which is not fully realized.
I think indeed, also, if I look at the competencies Infineon has, specifically focused around control, power and analog, I would say that Infineon's capabilities within power and analog are perfectly fitted to serve the AI power market much more so than most of our peers. Already mentioned that with the Dresden Power Fab, we have just the right fab coming online to serve this market. Now, we do have a couple of more questions. "Infineon is now the clear number one in microcontrollers globally, especially in automotive. How does that leadership position translate into better pricing power and stickier customer relationships over time?" Well, I mean, first of all, I would say, just having a number one position per se is not giving you a whole lot of pricing power, or at least not by itself.
I mean, the main reason Infineon has a certain pricing power and also gained this leadership is because of a superior product. Specifically our AURIX line of microcontrollers has established itself as the gold standard in automotive. The reason for that is the functional safety features and also the real-time capabilities, and for sure, a very good software stack. I would say those are key drivers for achieving the kind of pricing power. I would also argue that within our microcontroller business, we have very good pricing. For sure, we have large contracts which here and there also include lower prices. If I look at the pricing development within the group, in the microcontrollers, we are keeping prices on a very stable level while some other areas are more influenced by supply and demand.
For example, if I think about high voltage drivetrain components in electromobility, here the pricing can be more dynamic. While as in the microcontrollers, we do have a very good position which makes us immune from large cyclical behavior on the pricing side. I would say our number one position is in part a result of a good product and a good pricing position. For sure also having the name of number one microcontroller player helps with customers because customers want a reliable product. They want to know that for example, for very critical applications like a car or also a humanoid robot, that you can rely on semiconductors that actually make sure it works in every condition and in every scenario. The next question. The company talked about being a system supplier combining microcontrollers with power and connectivity.
How important is this combination in helping you deepen your moat in automotive industrial? I would say this is a key component for Infineon in our strategy. It is going beyond automotive and industrial. It's basically covering our entire portfolio and all our markets, even consumer, even specific markets like AI, because the combination of power and control, but also microcontrollers is always the same chain. If you wanna have a physical action from some kind of technological device, you need ultimately a motor or some actuator, which is steered by a power semiconductor, which is steered by a driver, which gets command by a microcontroller. This is always a chain and in many instances, it's very helpful for customers who have this combination from just one vendor.
We call it P2S strategy from product thinking to system. I think system understanding, and this is a very important part, and it helps in many areas, even in the AI space. There's another aspect, however, Infineon is also covering all required materials on the power side. We are not only doing silicon-based power semiconductors, but also silicon carbide and gallium nitride-based semiconductors. Once again here, having the full portfolio, because each, I would say, voltage conversion step has different requirements, so having the full portfolio is very helpful. For example, for high voltage application, grid applications like a solid-state transformer, today you would use silicon carbide. For advanced intermediate conversion, specifically for 800 volts, you will use gallium nitride.
If you go down to the core voltage around one volt, six volt, silicon today is still the best material, specifically if you can rely on the leading MOSFET franchise, which we have based on our thin film wafer production. The company recently completed the automotive Ethernet acquisition and continues to invest in microcontroller leadership. How important is this system approach combining power control and connectivity? I think I just answered it in part. Indeed, Ethernet is a very good extension for our microcontroller portfolio, specifically in the automotive space, but also in applications like robots. Why is that? Because if I think back at a car 10, 15 years ago, you had still classical bus systems.
In a car 15, 10 years ago, you mostly had control commands, and therefore a bus system was enough. If you think about a car today, you have very complex sensors, you have cameras, you have radar sensors, and those do not only transmit commands, but also large amounts of data. To allow this transport of large amounts of data in future cars, specifically highly automated cars, you need something more powerful than just a bus. The Ethernet is a very good complement to this. Given the fact that a zonal controller, which you have in a modern car usually has, amongst others, a microcontroller and some connectivity, specifically combination of microcontroller and connectivity is basically the backbone of a zonal or modern car architecture. This is indeed very helpful.
The company has shared very strong demand from AI data centers and tripling revenues in that area recently. How much more runway do you see over the next three years, and what gives you confidence that this growth is sustainable? Well, I mentioned it briefly in the presentation. We already give a projection for 2027, which is EUR 2.5 billion. This is already looking ahead a little bit. I would also argue that we already give a lot of, I would say, a lot of information here on how we expect the business to develop. A lot of foresight. I can also once again confirm that we haven't seen anything which would contradict our projection here. We are really confident that we can reach this growth.
You can see what major customers just present. Currently we see rather a very good development on the AI side. I think most of you will probably have tried what AI can do. I think that is really an exciting technology, and we have by far not reached the end here on how this can improve our lives. Next question. As you bring the new Smart Power Fab in Dresden online, what early indicators are you watching to judge whether you should accelerate the next phase of capacity expansion? This is a very good question, because there is a certain, I would say, time ahead which you need to decide if you build a new fab or not.
I would say that, with the Dresden Power Fab now for the intermediate future, we have really a huge and hugely important and also very, very big fab coming online. I think now there is no near-term requirement to think about a new fab. I would also argue that, for sure, we do have a leading franchise in the power semiconductor space. Still, there are areas where I would say, we see competition. For example, Chinese IGBTs, for electric cars in China is an area where Infineon has, I would say, left the market more or less because we think the pricing is not reasonable for us at this point in time.
This is actually a great opportunity right now because it allows us to transform existing capacities for semiconductors that used to be in other areas, for example, in basic electric cars, and change this capacity to AI-related MOSFETs. This allows us also to a certain amount to reuse existing fabs. The same holds, by the way, true for gallium nitride. We are the first company to launch 300-millimeter gallium nitride, which once again allows us to convert existing 300 mm capacity to the latest technology. In the future, the question will not only be when do you need to build a new fab. The question is also how you can run your existing fabs most efficiently with the highest margin business. I think those two questions are the key ones we are asking ourselves.
As said, so far, there's no plan to build a new fab, which I could announce here. Therefore, I would say keeping an eye out what might be the demand in four, five, six years is really crucial. Yeah, this is what we do without trying to over-invest in the space. Next question. Looking a few years out, what milestones should investors look for to gauge whether Infineon is on track? Good question. I would say definitely watch our AI revenues. So this is going to be a key indicator. There's more interesting fields. For example, we are engaging in quantum computing, being a fab for ion-based ion trap-based quantum computers, so-called QPUs.
There is, I think again, the robotics. Once humanoid robots will launch on a larger scale, this should be a nice business opportunity. For sure, there is our traditional automotive business. I think we should also continue to grow. I think looking at our midterm targets, mid- to long-term targets, our so-called target operating model, which includes 25% margin and solid growth around 10%, I think this is what you should look at, and in general, how Infineon is doing versus peers. I think it is very important that as Infineon, we really want to show strong execution. That means we don't get into a competition of promising, but we want to get into a competition of delivering our financial milestones and business milestones.
I think this is exactly what you should watch for. The company now I'm seeing I have four more minutes, but like, three, four, five more questions, so let me try to be a little bit faster. The company has managed to grow structurally attractive areas. Okay, I mentioned this in short. Again, I mean, allocating capital is a key. For sure, we are trying to allocate to the most attractive areas, and that includes also selectively moving away from business if we do not think that it's attractive anymore. One example here is plain standard IGBTs in electric cars, specifically in China, where we think that the margin is not fulfilling our requirements anymore. Since we have requirements for other capacities, we can convert this. Next question, the company just delivered a solid start.
Where do you see most room for margin expansion as your new fabs and capacity ramp? You are exactly giving the answer. First of all, ramping the Dresden Power Fab, specifically which AI business, which is margin accretive, should be a nice boost to the margin, but also a recovery in the other areas, specifically automotive and industrial, should bring another expansion or improvement of margin in those areas. Are your products ruggedized and utilized in satellites? Yes, they are. We call this radiation-hardened chips. They are used in aerospace and also in some defense applications. I would not say that this is a very big part of our business because from a number perspective, the non-rugged business is still much larger.
We do have a so-called high-rel business where we also use that kind of semiconductors. How do your AURIX and TRAVEO microcontrollers plus the automotive Ethernet change with the content per car? We do expect a slight upward movement in content per car. Today, we have many microcontrollers in our car. The numbers are going slightly down, but the microcontrollers will become more complex. If I look at a modern software-defined vehicle, you will have several tiers. You will have a large zonal controller. You might have edge controllers. All of them use our microcontrollers and also require Ethernet connection. We think the content gain is a slightly positive one. As vehicles and industrial systems become more connected, do you expect security features in microcontrollers to become a stronger driver?
We already do have security features in the microcontrollers also based on the heritage of Infineon's business in security and chip cards. Yes, we expect this to be actually quite a strong driver also in the future to drive the business, one of the key features of our AURIX line. I am afraid we have reached the end of the session. There are a few more questions. Thank you for all the interest and thank you for all your questions. For those whose question I could not answer now, feel free to contact me, contact the IR team. We will answer your remaining questions and all others and for sure yourself. I wish a great day, and thank you for the interest.