Infineon(US:IFNNY) Haitong Securities International·2025-08-05 14:05Investment Rating - The report provides a rating of "Outperform" for Infineon, indicating an expected total return over the next 12-18 months that exceeds the relevant market benchmark [15]. Core Insights - Infineon reported FY25 Q3 revenue of €3.7 billion, aligning with market expectations, and an EPS of €0.37, surpassing the consensus of €0.34, showcasing strong profitability resilience [1][5]. - The automotive segment (ATV) generated €1.87 billion, down 11.5% YoY, while the Power & Sensor Systems (PSS) segment saw significant growth of 40.6% YoY, reaching €1.53 billion, driven by robust demand for AI server power solutions [1][2][5]. - The company anticipates FY2025 AI-related revenue to reach €600 million, potentially increasing to €1 billion in FY2026, highlighting the substantial impact of AI on performance [2][6]. - Infineon is strategically managing inventory, with current turnover at 176 days, above the target of 120 days, but plans to reduce it to 150-160 days by fiscal year-end, reflecting a cautious yet flexible approach to market recovery [3][7]. Summary by Sections Financial Performance - Infineon's Q3 FY25 revenue was €3.7 billion, with an EPS of €0.37, exceeding market expectations [1][5]. - The adjusted gross margin improved to 43% from 40.9% in Q2 FY25, driven by increased shipments and lower idle costs [1][5]. Business Segments - Automotive (ATV) revenue was €1.87 billion, down 11.5% YoY; Green Industrial Power (GIP) revenue was €431 million, down 9.3% YoY; PSS revenue was €1.53 billion, up 40.6% YoY; Connected Secure Systems (CSS) revenue was €349 million, down 4.6% YoY [1][5]. - The PSS segment's growth is primarily attributed to strong demand for AI server power solutions, with significant collaborations, such as with NVIDIA on a high-voltage DC power architecture [2][6]. Future Outlook - For Q4 FY25, revenue is projected at €3.9 billion, reflecting a 5.3% QoQ increase but a slight decline of 0.5% YoY, with all business segments expected to grow [3][8]. - FY2025 revenue is forecasted at €14.6 billion, a decrease of 2.2% YoY, with adjusted gross margin expected to remain above 40% [3][8].