Investment Rating - The investment rating for Infineon Technologies AG is Overweight, with a price target of €38.00, while the stock closed at €36.21 on July 2, 2025 [4]. Core Insights - TSMC's decision to exit GaN/Silicon production by July 2027 indicates a strategic shift, prompting Navitas to transition to Powerchip Semiconductor Manufacturing Corporation (PSMC) for GaN/Si wafer production, with initial mass production expected in the first half of 2026 [2][3]. - Infineon may benefit from potential strategic partnerships for GaN production, as other GaN device makers might seek to utilize Infineon's 300mm facility or process IP [3][7]. - The exit of TSMC could lead to pricing pressure on Infineon due to lower barriers to entry at PSMC, similar to trends observed in the SiC market [3][7]. - Infineon holds a significant intellectual property portfolio in GaN/Si, with 350 patent families, which may provide a competitive advantage [7]. Summary by Sections Industry Overview - TSMC's exit from GaN/Si production is a significant development in the semiconductor industry, particularly affecting companies like Infineon and Navitas [2][7]. Company Specifics - Infineon Technologies AG has a market capitalization of €47.13 billion and a net debt of €3.506 billion as of September 2025 [4]. - The company is expected to navigate potential challenges in reliability testing for GaN devices, which may need to be developed in-house following TSMC's exit [3][7]. Financial Metrics - The valuation methodology applied to Infineon is based on an 18x multiple of the FY26 EPS of €2.10, reflecting expectations of a cyclical recovery in FY26 [9].