Today I would like to take a look at a sector with you here in „Schlussgong“ that had to accept a cyclical weak phase in 2023, but should be able to grow dynamically again in 2024.

The semiconductor industry is currently still experiencing a small dip due to the economic environment and disrupted supply chains, but this should soon be a thing of the past. In the coming years there will be a massive boom in this area.

Different trends such as artificial intelligence (AI), digitization, energy transition or electromobility ensure that ever more and more powerful chips are needed. DAX-listed Infineon, for example, will benefit from this.

Focus on future trends The temporary demand dip in the consumer sector is likely to be checked off faster than expected. Market researchers from IDS expect that chip sales will grow again worldwide by 20% to 633 billion dollars in the coming year due to the introduction of AI PCs and smartphones.

The structural growth in the semiconductor sector is unbroken anyway. This is ensured by future trends such as the energy transition or the upheaval in the auto industry. Infineon generates about half of its sales in the automotive sector.

The company cooperates closely with several car manufacturers on silicon carbide-based semiconductors. These are used, for example, in electric cars, charging stations or energy storage systems when particularly powerful system solutions with low power consumption are required.

The demand for semiconductors will continue to increase in the future. Currently, semiconductors worth up to 1,300 US dollars are installed in an electric car – twice as many as in an internal combustion engine. By 2030, this should be up to 2,000 US dollars per vehicle. Infineon should therefore also grow even if the vehicle production were to stagnate.

By the end of the decade, the company wants to secure a share of 30% of the global market for silicon carbide and thus occupy a central position within the energy transition. To achieve this goal, Infineon is investing heavily in new factories – 3.3 billion euros alone this year.

Future growth not priced in In the past financial year 2022/2023 (up to September), Infineon increased sales by around 15% to 16.31 billion euros. Net profit even increased by 44% to 3.14 billion euros. In the current financial year 2023/2024, revenues are expected to grow by around 4%. The margin will probably be slightly weaker. Profits are expected to increase significantly in the coming years.

The expected growth is not yet reflected in the stock price. At present, the Infineon share is valued at a price-earnings ratio (P/E ratio) of 13 and should therefore also have room for improvement in 2024.

In my stock exchange service „Power Depot“ I am betting on two smaller chip competitors that are even cheaper than Infineon. So there are still real P/E bargain prices to be found in this sector.