Infineon considering moving more production capacity to US

Infineon, the world’s biggest supplier of silicon chips to the car industry, said it was considering relocating more manufacturing across the Atlantic to comply with recently passed legislation that seeks to boost the US semiconductor industry. .

Peter Wawer, head of Infineon’s green technology division, said the German chipmaker was reviewing requirements in the Inflation Reduction Act that relate to the value of goods manufactured in the US.

“We certainly need to see that we comply with these regulations,” Wawer said, “and that “we are not put out of business because we don’t have a certain share of value in the US”.

Waver said the company was currently happy with its footprint in the US, but that in the future it “may need to move a certain amount of product, or some additional manufacturing, to the US.”

The Munich-based company has seven manufacturing sites across the US and one in Mexico, thanks largely to acquisitions over the past decade, such as paying $3 billion for International Rectifiers in 2015 and rival Cypress Semiconductor in 2019. $9 billion acquisition.

President Biden’s $369 billion package of subsidies and tax incentives has raised concerns among European policymakers as high-tech industries needing a green transition eye opportunities across the Atlantic.

Germany has also subsidized billions of euros to encourage manufacturing at home after chip shortages prompted by the coronavirus pandemic hit its car industry hard and highlighted how essential the sector is.

Infineon benefited from demand that coincided with a pandemic-induced bottleneck in semiconductor production. The company last month set up a plant in the East German city of Dresden, which it received a €1 billion subsidy to build – about a fifth of the cost.

Wawer said the pandemic showed how dependent many industries were on semiconductors, which mostly originate from Taiwan. “Now everyone is starting to think: ‘Oops, what if something happens between China and Taiwan’. It definitely sets the tone for this whole discussion.

Infineon specializes in less advanced chips that are made for industries such as the automotive sector, which makes up 45 percent of the company’s sales, rather than being used in computationally powerful devices.

Even though car sales are slowing, Infineon is betting that it will benefit from the transition to electric vehicles, which require more chips than combustion engines.

Amit Harchandani, head of European technology research at Citi, said Infineon’s power-efficiency chips make it a “big beneficiary of the shift to renewable energy”.

“I would expect any company with exposure to the energy transition to evaluate specifically the Inflation Reduction Act incentives,” he added.

Waver’s green industrial power division made up only 13 per cent of Infineon’s €14.2bn sales last year. But Wawer said the increase in green energy infrastructure such as wind turbines, solar panels, electric car chargers as well as the transmission lines needed to connect everything to the grid meant that demand for the chips had “simply exploded”. Was.

The division expects annual revenue growth of more than 10 percent “for years to come,” Wawer said.

Infineon generated 11 percent of revenue in the US last year, while 29 percent came from mainland China.

Additional reporting by Tim Bradshaw